Purdue’s tuition freeze at year 10: Most students graduate debt-free
Purdue’s tuition freeze at year 10: Most students graduate debt-free
By Lee Lawrence, The Christian Science Monitor, August 8, 2022
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President Joe Biden is expected to decide this month whether there will be mass student debt cancellation. And while Americans are at loggerheads over that, they are in almost full agreement about fixing the root cause: the high cost of a college education.
Asked to choose between the government forgiving student debt or making college more affordable for current and future students, an astounding 82% of respondents in a recent NPR/Ipsos poll opt for the latter. Even among those with outstanding loans, long-term affordability wins out.
Getting there is not easy. But at Purdue University, an ambitious price freeze with tuition at just under $10,000 a year has held for a decade, offering innovative – if not always flawless or popular – cost-cutting models for holding the line on student bills.
Students taking a break in the cool, wood-paneled spaces of Purdue Memorial Union on a recent scorching summer day will pay no more than Boilermakers did 10 years ago – and many will likely get their bachelor's debt-free, as some 60% did in May.
“If an institution prioritizes affordability, you’d be surprised – we’ve been surprised – by how much progress can be made,” says Mitch Daniels, the former Indiana governor who announced the tuition freeze in the spring of 2013, just months after he became Purdue’s president.
The freeze meant forfeiting some $40 million from a regular increase in price. When the university managed to absorb it just by tightening its belt, the board greenlighted a second year, then a third. As applications soared, enrollment grew, and proud alumni opened their wallets, the “freeze” itself became a large source of income.
It started as a “gesture”
Sitting in his office by the campus bell tower, Mr. Daniels – who retires at the end of the calendar year with a résumé that includes big-business CEO and director of the Office of Management and Budget for President George W. Bush – traces the freeze idea back to his state governorship. A persistent question he heard then, he says, was, “Isn’t there someplace to get a quality education that won’t put us deeply in debt?”
What has a split Congress accomplished? A surprising amount.
He initially proposed the freeze “as a gesture, a one-time acknowledgment that we understood.” The average cost in real dollars of a bachelor’s degree in the United States had jumped by 41% between 2000 and 2012. Even Purdue, a public, land-grant institution, had consistently raised its price for more than 30 years.
When Andy Pavlopoulos enrolled in the aviation department in 1986, in-state tuition for the year at the flagship West Lafayette campus was $1,870. With fees, room and board, books, and the like, his total bill “was like $8,000,” says the father of three who, in his second career, owns and runs a family restaurant in Saint Joseph, Michigan.
By the time Mr. Pavlopoulos’ eldest child was scrolling through college websites as a high school junior in 2013, prices had soared. In-state tuition reached $9,992, and the full cost of attending – commonly referred to as the sticker price – was $22,782. For out-of-state students like his son, this meant $28,794 in tuition for a total annual bill of $41,614.
Something to remember about sticker prices is that only a minority of students nationwide actually pay them. As each of his three children enrolled at Purdue, Mr. Pavlopoulos expected them to do what he’d done: get grants and scholarships that knock down the total they owe.
“The sticker price is damaging misinformation,” says Phillip Levine, a Wellesley College economics scholar with a specialty in higher education. It can cause “people to make decisions that are not appropriate for them.” As a result, many who would thrive in a four-year college decide it isn’t for them.
“People have no idea what colleges cost,” he says. “They tend to cost a lot less than people think.”
Like an effective meme, Purdue holding “tuition under $10,000” broadcasts affordability.
“There’s a nice message off of a low tuition,” Mr. Levine says. “Particularly for lower-income families, we know based on research that the ability to simplify the problem increases their likelihood of attending.”
Another way Purdue does this is by applying the freeze to the full cost of attendance. Institutions that have similarly suspended tuition hikes often increase other charges. At Purdue, on the other hand, the sticker price, too, doesn’t budge.
As the freeze entered its second year, the number of applications to the undergraduate program jumped by 28%. That has since climbed steadily by more modest percentages. By 2021, the admissions office was processing almost twice as many applications as it had in 2012.
Aditi Barla’s was among them. A resident of Illinois, she only analyzed her choices once acceptances were in.
“Purdue is a great school for CS,” she reasoned, referring to her computer science major. “It’s a great STEM school. And, oh, it also has a tuition freeze.” Other contenders included the University of Michigan and the University of Washington in Seattle, but their sticker prices were in the $60,000-to-$70,000 range with no offers of scholarships or grants. With a younger brother in the wings and plans to go to graduate school, the choice was clear.
Today, she is a rising sophomore with no debt.
More students means more revenue
Even after enrollments nationwide began to decline, Purdue’s freshman and transfer admissions grew on average by about 500 a year. Last fall, matriculations hit a new and unexpected high, with more than 10,000 freshmen arriving on campus.
The number of postgraduate students has also grown, helping to raise the university’s total enrollment from 39,256 in 2012 to 49,639 in 2021. With more than half paying out-of-state or international prices, tuition revenue increased by a third during the freeze, from $629 million in 2012 to $832 million in 2021.
But the surge in students has also posed problems. The university has had to add dorms and temporarily house students in cubicle-like lodgings created in dorm basements and study lounges.
Ms. Barla knew guys who started the year in cramped, windowless quarters: “Yeah,” she says, “not ideal, especially when you’re coming into college for the first time.” By fall break, everyone was in permanent housing, and in the spring, the university was purchasing an on-campus housing complex.
“We’re pressing up against limits,” admits Mr. Daniels. To mitigate this, the university has introduced some hybrid classes and has helped students who are so inclined to graduate in three years.
But an important feature of Purdue’s success is that it has ensured its foundation remained solid. “We don’t run a deficit. We don’t borrow any money. We don’t raid the cookie jar,” Mr. Daniels says, referring to having reduced the spending distribution of the nearly $2.5 billion endowment from 5% to 4%. “We don’t ever let it affect quality.”
Department of Education statistics indicate that, from 2012 through 2020 (the last year for which this data is available), Purdue kept up its spending on instruction at the same pace as peer institutions. Even as enrollment galloped, its student ratio is a very respectable 14-to-1. And it enhanced its campus. Among other improvements, it opened the $79 million, 164,000-square-foot, state-of-the-art Wilmeth Active Learning Center and, last year, renovated its iconic Memorial Union.
As a research university, it has increasingly leveraged grants and contracts to bring students in on groundbreaking innovations and technologies at little to no cost to the university’s bottom line. This has helped it attract students without resorting to a widely used tactic. It’s not uncommon that at institutions that charge up to $60,000, says Mr. Levine, “virtually every single student’s getting a $20,000 or more merit scholarship to bring the number back to $30 or $40,000 – which, not coincidentally, happens to be in the range of what public institutions charge.”
As for the “dos” of keeping prices down, Mr. Daniels is “bashful about ever prescribing anything we’ve done here,” he says. “The decisions, we believe, fit this place.”
However, not a month goes by, says Chris Ruhl, the chief financial officer, without a counterpart from another school getting in touch wanting to know what worked and how the campus reacted.
Successful but not without challenges
Not every cost-cutting measure has proved universally popular. Some faculty, for instance, voiced discontent when the university changed employees’ benefits. In line with a prevailing trend in higher ed, it adopted health savings accounts with high deductibles. It also changed over to defined contribution retirement plans, favored mostly by private colleges. When it contracted out its food service, Purdue Student Government formally condemned its choice of corporate giant Aramark, on the grounds that the company had incurred food and safety violations at another Indiana campus.
And when Purdue pioneered its own income share agreement – in which students pledge to share a portion of future income – as an alternative to traditional student loans, some accused the university of breaking the law. Purdue has since suspended future contracts in the program, which is similar to a federal income-based repayment loan that also ran into trouble in its implementation. *
Other steps seem not to have caused waves. Mr. Ruhl points to such things as dismantling Purdue’s transportation system and contracting with the city to extend transit routes onto campus; outsourcing printing and photocopying services; and consolidating the university’s data centers, information technology departments, and maintenance and custodial staffs.
“As the student body has grown,” he says, “we’ve been able to maintain staffing levels” without hiring more people.
Making affordability an institution-wide mission, he says, has been crucial not just in cutting costs but in improving the quality of the institution.
Statistics on retention and graduation rates, rankings, and fundraising support Mr. Ruhl’s claim that “all sorts of key metrics have improved substantially during this period of time.” Likewise, the percentage of undergraduates earning their bachelor’s without incurring debt marched upward. In 2012, the proportion leaving campus with the bachelor's diploma and no loan was 49.5%. Fifty-four percent did by 2016, and 60% did in 2021.
But Purdue’s performance in one metric proves cautionary in terms of students being able to afford, as Mr. Levine puts it, “the place where they belong.” In a conversation over Zoom, he crunches some numbers on the university’s net price calculator, a feature that institutions that receive money from the federal government are required to post on their website.
He invents a young Indiana resident with a 3.5 GPA, solid SAT scores, and a family income well below $50,000. Asked how much the family can contribute, he types in $0. Within seconds, the calculator estimates that even with a $6,459 Pell Grant, various scholarships, and $5,500 in federal student loans, the family would have to “come up with $5,087 a year that they have no ability to pay for in cash,” Mr. Levine reports. The student can earn $3,000 of that through a work-study program or campus job.
The exercise, he says, shows that for a family “that has nothing,” borrowing even $2,000 to $5,000 a year “is not affordable.”
“Despite the fact that college costs a lot less than people think, it’s still too expensive,” he says. But not if the Pell Grant were doubled. “That would eliminate the gap completely,” in which case, Mr. Levine says he’d “be on board with low tuitions.” As it is, though, he believes freezes benefit wealthier students to the detriment of those of lower-income backgrounds. If the former paid the full sticker price, the university would have extra income to channel into financial aid.
The amount Purdue has spent on merit and need-based scholarships, fellowships, and awards has fluctuated over the course of the tuition freeze. In 2017-18, it gave 21% more aid than it had in 2012, but in 2018-19 the amount it disbursed fell below the 2012 levels.
“We do have limited dollars,” says Heidi Carl, Purdue’s executive director of financial aid, whose office prioritizes helping Indiana families with $70,000 or less in adjusted gross income. For some with $50,000 or less, it succeeds in meeting their full need.
“We see this pattern of public institutions increasing tuitions and then also increasing aid,” says economics professor Emily Cook of Tulane University, referring to a recent study on college pricing she co-wrote. The theory is that they are channeling the extra revenue into scholarships and grants that benefit both low-income students and middle-income families who often bear the burden of student debt.
“Our study,” says Mrs. Cook, “is overall encouraging in that we are heading in the direction of making college affordable.”
As Mr. Daniels packs up his office, it is anybody’s guess whether the tuition freeze will extend beyond 2023 or what that would mean for students.
But whatever happens next, freezing the sticker price has done more than hit the reset button for one institution: Its leaps as well as its stumbles offer a decade’s worth of lessons on affordability.
•Editor’s note: This story has been changed to clarify that only new contracts in Purdue's income share agreement program have been suspended.
