Indiana Governor Mitch Daniels announced that he will become the president of Purdue University when he leaves office in January. While fans of the cost-cutting governor had hoped he would set his eyes on a different president, the announcement should be welcome news to students and taxpayers alike. One of the nation’s most successful, reform-minded executive can now play a role in reinventing higher education.

Few sectors of the economy are in greater need of reform and have such promising solutions lurking just around the corner.

The United States spends approximately $460 billion annually on postsecondary education, or about 3.2 percent of its Gross Domestic Product. The federal government spends tens of billions annually to support college students and their colleges and universities, while state and local governments kick in another $71 billion. Families and students shoulder the rest of the burden, with many taking our gigantic loans or liquidating their life savings to pay the steep costs of college, in hopes that a degree will unlock a brighter future.

Sadly, a growing body of evidence suggests that much of this investment is a waste. A 2011 report, based on survey data of college students around the country, found that 45 percent of all students show no significant gains in learning after two years in school. Even more discouraging, 33 percent effectively learned nothing after four years. Statistics like this are forcing many American families to question whether four years of tuition and costs, which now top $40,000 and $20,000 at private and public colleges respectively, are worth it.

And those who might think the perhaps the value of having the credential itself somehow justifies these costs, even absent actual learning, keep in mind that reports show that more than half of recent college grads are either unemployed or underemployed (that means in a job that doesn’t require a bachelor’s degree). Surely the parents of those twenty-somethings who have moved back in must be wondering why they invested so much money and effort in pursuit of a college diploma for junior, and have a long list of ways they wish they had used that money instead.

In his new book, law professor Glenn Reynolds, host of the Instapundit blog, argues that higher education is the new bubble. Like the housing bubble, the higher education bubble has been driven by subsidized loans and overly optimistic expectations about the future value of that investment. The housing bubble’s collapse left a shattered financial system and wiped out trillions from American families’ net worth. The higher education bubble’s explosion will leave millions of young Americans holding a degree that’s not worth the paper it’s printed on and a gigantic debt burden which will discourage entrepreneurism and family formation, both of which are critical to their—and our country’s—long-term financial health.

Our current college and university system, donned with decades worth of new high-tech labs, posh dorms, and cutting edge lecture halls, will also be rocked as new questions are raised about what, exactly, students—and taxpayers—are buying when they send these institutions so much money.

Enter Governor Daniels. Followers of education reform may know that his tenure in Indiana included the enactment of one of the nation’s largest school choice programs. But less appreciated has been Governor Daniels’s role in improving access to educational opportunities through Indiana’s partnership with the Western Governors University (WGU), a private, low-cost online university. More than 33,000 students across the country take classes online through WGU, where students are charged a flat-fee of $2,890 for a 6-month term.

By taking the helm at Purdue, Governor Daniels now has the opportunity to change higher education from within by implementing similar reforms to improve quality, drive-down cost, and expand access.

Just over the past year, schools like Stanford, MIT, and Harvard have begun offering free online courses that students anywhere can take, earning a grade and certificate of mastery, if they successfully complete the work. A MIT course on Circuits and Electronics attracted 120,000 students. Stanford’s free online class on Artificial Intelligence attracted 58,000 students.

Given Daniels’ track record in government, it would be surprising if he does not pursue similar cost-changing and quality-enhancing reforms at Purdue. Such reforms could make Purdue a leader in the new postsecondary education paradigm and serve as a model for other institutions.

Wouldn’t it make sense for the man who earned the nickname “the Blade” as OMB Director to help pop the higher education bubble?

Carrie Lukas is the managing director at Independent Women's Forum.