For the first time, student debt due to higher education costs is higher than credit card debt at $829 billion, and this year’s graduating class is the most indebted class ever, according to Indiana Commissioner for Higher Education Teresa Lubbers.
“This is not an inconsequential concern,” she said, “because you have to juxtapose this very real strain that families and students face with the strains that institutions face as well at the same time; and factor into that the fact that we’re telling everyone that they need post-secondary credentials of some sort for this new economy, so there are lots of stresses all the way around.”
Indiana’s higher education funding has been receiving big cuts over the past couple of years, causing schools like Purdue University to hike up tuition and fees and forcing schools to rethink their budget plans, according to Tim Sands, Provost and Executive Vice President for Academic Affairs at Purdue.
“We recognized what was likely coming,” he said, “and we formed an effort called Sustaining New Synergies and identified about $67 million in recurring savings that we could expect to garner, and that process is being implemented. It’s not without pain; we’ve cut $20 million out of our academic budgets, and that hurts, but it is necessary.”
Sands says that although Purdue is raising tuition and fees to fill some financial holes, that kind of solution is more like a 2 year plan that is not sustainable.
IU Vice President and Chief Financial Officer Neil Theobald also highlighted some longer-term solutions to aid IU’s financial situation.
“500 of our employees will take early retirement, which will save us about 6 million dollars a year. We are closing the School of Continuing Studies, which was a wrenching decision, but that will save us up to $4 million a year. Centralized Purchasing should save us about $12 million a year.”
Theobald says the early retirement plan will cost $26 million upfront, but the money will be reimbursed over the course of the next four to five years.
He also addressed the talent that will be lost among those 500 staff members, but says that this voluntary early retirement plan will allow them the freedom to pursue something elsewhere.