Top executives at major for-profit colleges take in millions of dollars in annual compensation — primarily from taxpayer subsidies -– yet most of their pay is unrelated to student achievement, according to preliminary findings from a congressional investigation. The report from Rep. Elijah Cummings (D-Md.), the ranking member of the House Oversight and Government Reform committee, found that publicly traded college corporations calculate executive compensation “predominantly on the profitability of their companies rather than the success of their students.”
“This is especially troubling given the billions of taxpayer dollars flowing into these institutions and the serious financial risks to students who go through these programs,” the report concluded.
For-profit colleges receive much of their revenues from federal financial aid: student loans, Pell grants and military educational benefits. Yet students often fare poorly, dropping out in large numbers and defaulting on federal loans at double the rate of their counterparts at public institutions.
Cummings sent letters in December to 13 for-profit college corporations, seeking information on how the quality of education and student performance are tied to what he termed “lavish” executive pay at the schools. Chief executive officers at several for-profit education companies take in much more than presidents at some of the most prestigious U.S. private universities.
Todd S. Nelson, the former chief executive and now chairman of Education Management Corp., the nation’s second-largest operator of for-profit colleges, took in more than $13.1 million last year. The highest-paid Ivy League president, Richard C. Levin of Yale University, received $1.6 million in compensation, according to tax filings.
In a preliminary report sent to Democratic members of the House Oversight and Government Reform committee on Friday, congressional staff found that “the single most significant measure for determining executive compensation at these schools is corporate profitability, including factors such as operating income, earnings, profits, operating margins, earnings per share, net cash flow, and revenue.”
Read more: Huffington Post