Published: August 13, 2008 10:07 pm         

Daniels’ plan aims to make college education more accessible, affordable

TERRE HAUTE — Gov. Mitch Daniels on Wednesday unveiled a proposal to make a college education more accessible and affordable for Hoosier high-school graduates, particularly those from middle-income families.

He will ask the next Indiana General Assembly to approve the Hoosier College Promise, which would be available to high-school graduates whose families earn about $60,000 or less annually.

Those students would receive two years of free tuition at Ivy Tech Community College or an equivalent amount of $6,000 in need-based aid to use for their first two years at other colleges or universities in Indiana.

Indiana’s student aid programs do a good job in assisting those from low-income families, Daniels said.

“We do have a very large gap in the middle — the lower-middle and median income families. The cost of college has outrun affordability in too many cases,” Daniels said during an announcement at Ivy Tech in Terre Haute.

It is estimated the plan would cost about $50 million annually, once fully implemented. About 24,000 new high-school graduates (incoming freshmen) would be expected to receive a Hoosier College Promise award each year.

He proposed two possible financing options that both involve the Hoosier Lottery.

One option would be to privatize the lottery and auction the rights to manage it for 30 years through a lease agreement. Daniels suggested that the private contractor would provide an up-front payment of $1 billion or more, which would be put into a trust for the program. The company also would have to pay the state an annual royalty of $200 million to support current uses of lottery funds, Daniels said.

The second option involves the state issuing $1 billion in bonds, with proceeds put in a trust to fund the program. The 30-year bonds would be repaid through future growth in lottery revenue.

Since 2002, the average annual growth in lottery revenue has been 5 percent. Over the lottery’s 18-year existence, the average annual growth has been 2.8 percent, said Jane Jankowski, the governor’s press secretary.

Daniels said he prefers to lease the lottery because it could potentially generate more money for programs. Also, “the risk of lottery revenue growth is shifted to the private contractor,” he said.

If the state issues bonds, then it assumes that risk if there are some years where lottery revenue growth doesn’t meet expectations.

Daniels believes that improving Indiana’s college attainment rate and providing a better trained and educated work force are critical to the state’s future and its ability to continue attracting good-paying jobs.

He also believes the Hoosier College Promise program could have a major impact on reducing the state’s “totally unacceptable” high-school dropout rate by providing an incentive to graduate — two years of free tuition at Ivy Tech or $6,000 in tuition at another Indiana college.

Under Hoosier College Promise, students would be required to be enrolled full-time at a college and maintain a C average in a degree program.

The program would supplement the more than $200 million in need-based financial aid provided through the State Student Assistance Commission of Indiana.

For example, students from families with average incomes of $40,000 currently receive an average of $400 of need-based aid to attend Ivy Tech. The governor’s plan would make up the difference to $3,000 annually for each of two years.

Students who attend four-year public or private universities generally receive larger grants from SSACI and would get less assistance from the Hoosier Promise program.

Ivy Tech has agreed to hold any tuition increase to the rate of inflation for at least five years, assuming consistent state support, and Daniels has challenged other Indiana colleges and universities to consider what they can do to keep tuition increases in check.

Jeff Pittman, chancellor of Ivy Tech-Wabash Valley Region, applauded the program, saying it will help students and families with college costs and create incentive for high-school students to graduate.

Sharee Switzer, Ivy Tech Student Government Association president, did not attend college until 17 years after she graduated from high school, and cost was a major factor.

Now, the Hoosier College Promise program will make it easier and more affordable to send her own kids to college. “I think it would be great,” she said.

Democratic legislators praise the idea of making college more affordable for high-school graduates, but they have concerns about how it would be financed.

“As a public school teacher, anything we can do to get students into Ivy Tech or Indiana State University is a very positive thing,” said state Sen. Tim Skinner, D-Terre Haute.

But he wants more details on how it would be financed. “I’m a bit skeptical,” he said. “I’m not a big fan of privatizing or leasing state services, but you’ve got to take a look at what the payback is going to be.”

Also, the bonding proposal is based on growth in lottery revenues. Depending on the state of the economy and whether people have disposable income to spend on the lottery, “It’s not a real source of revenue you can consistently hang your hat on,” Skinner said.

State Rep. Clyde Kersey, D-Terre Haute, said he likes the concept, which addresses a serious need in the state. It would benefit students “who would probably never have the opportunity to go to college unless a program like this is available,” he said.

But when it comes to financing the proposal, “The devil is in the details,” Kersey said. “I think it’s going to be very difficult for the governor to get a privatization plan through the Legislature for the lottery — consider what happened with [Family and Social Services Administration] and the Indiana Toll road.”

Kersey is more open to the bonding proposal.

Dan Bradley, Indiana State University president, said there are many questions about which students would benefit and how the program would be funded.

“I think it’s a good concept,” Bradley said. The fact that the Promise award could be used to attend other Indiana colleges and universities “would make it obviously very valuable to Indiana State students as well.”

Sue Loughlin can be reached at (812) 231-4235 or sue.loughlin@tribstar.com.