×

Student debt crushes innovation: College president

Decreased consumer spending and home buying have become well-documented trends of mounting student loan obligations in the United States. Lost entrepreneurship and innovation from hesitant, debt-ridden college graduates is just as alarming, a university president said on Wednesday.

"That's maybe as big a long-term worry as any because we've counted on American inventiveness and innovation to cover over a lot of the other economic problems we've inflicted on ourselves," Mitch Daniels, former governor of Indiana and president of Purdue University told CNBC's "Street Signs."

Then-Indiana Gov. Mitch Daniels leaves the White House after a meeting of the National Governors Association with President Barack Obama in February 2012.
Getty Images
Then-Indiana Gov. Mitch Daniels leaves the White House after a meeting of the National Governors Association with President Barack Obama in February 2012.

Student debt in the United States has reached $1.3 trillion this year, according to the U.S. Federal Reserve. "Every citizen and taxpayer" should be concerned about increasing debt totals, Daniels said.

Read MoreAffordable college 'critical' to success: Academic

"There's no question a lot of these loans are not going to get paid back," he argued.

"The machine will go tilt" if more universities and lenders refuse to ease the burden on students, Daniels said. Purdue has frozen tuition costs and attempted to cut room and board prices, among other measures to chop costs, he said.

Read MoreCramer: The best way to pay for college