Another Reason the Tuition Is Too Damned High: Overpaid College Presidents

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College student with no money in his pockets.
Alamy
Between this summer's battle over student loan interest rates and President Obama's recent move to give colleges economic grades, the high price of college has moved front-and-center in the news. On Thursday, we looked at some of the reasons that tuitions have been skyrocketing, and what you can do about it. Dylan Matthews, at The Washington Post's Wonkblog, has been doing some outstanding work on this, and today Jaeah Lee and Maggie Severns, writing for Mother Jones, offered a solid follow-up. Their focus is on one specific spending item -- salaries -- and their articles look at what happens when college presidents and celebrity faculty members are paid like rock stars -- and given the kinds of perks that are usually associated with Wall Street.

In a lot of ways, trends in higher education mirror the rest of the economy, in which a few top-level executives have seen their salaries rise exponentially, while lower-level workers have seen their pay and benefits shrink. A recent article in the Chronicle of Higher Education laid this out, noting that, while faculty members have had modest salary growth in the last few years, these gains have been swallowed up by a 3 percent inflation rate. In other words, when it comes to bottom line spending power, faculty members have experienced between a 0.8 percent and 1.4 percent drop in their salaries.


But if rank-and-file faculty members are making less money, top-level administrators are making a lot more. On average, Lee and Severns report, college presidents make 3-4 times as much as their average professors. And, with an ever-increasing number of non tenure-track and part-time instructors filling the ranks of the faculty, it's not surprising that that gap is getting even wider.

Lee and Severns also offer a list of outrageous perks paid to college administrators. While strange, the list of low-interest loans and staggering retirement/severance bonuses is likely to be depressingly familiar to anyone who has watched Wall Street for the last few years. And the justification for these bonuses is also familiar: like their Wall Street brethren, these top-earning academics were paid outrageous sums because, in the words of one university administrator, "In basic financial terms, the return on investment is remarkably high."

Fair enough, but one question remains: is this return on investment, which is usually measured in terms of fundraising and building projects, accruing to students? Or are America's students borrowing a record amount of money to pay for a fundraising staff whose efforts have little to do with improving educational outcomes?

Bruce Watson is DailyFinance's Savings Editor. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.


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chrispnet

Everyone is overpaid through the other guys eyes.

Watson and envy-profiteers like him love to stir up the covetous masses.

Meanwhile, let me know when you turn down your salary, or negotiate downward.

September 10 2013 at 2:53 PM Report abuse rate up rate down Reply
petrini1

True, many college presidents are overpaid. But typically, the highest-paid person on the campus payroll is not the college president. It's the men's football or basketball coach. Meanwhile, the adjuncts and other non-tenured instructors who are actually teaching the classes are paid next to nothing. It's disgusting.

September 07 2013 at 1:22 AM Report abuse rate up rate down Reply
monkutare1

CEO\'s and other heads of big business make what - about a hundred times each of their employees? Why do some people need SO much money? They have more than enough to live well and pass it along to inheritance. There are so many pigs; it\'s sad.

September 07 2013 at 12:41 AM Report abuse rate up rate down Reply
1 reply to monkutare1's comment
chrispnet

Apparently you don't merit that compensation level. When you do, regardless of the reasons, give back how you see fit.

September 10 2013 at 2:39 PM Report abuse rate up rate down Reply
Kay

Every time I learn what a college president makes I just cringe. You know that it is going to cost much more for your children to attend a college because they have to make up that salary of the big wigs! Same with all large companies. We end up paying double what something is worth just to pay the big wigs! And for what, so they can travel around the world, live in mansions, drive big cars or cars and homes that are furnished to them. Meanwhile the students parents are living pay check to pay check and hardly making ends meet because of the cost for their child or grandchild to attend a college. It is even the same for the local community colleges. Really sad when you end up figuring it all out. And the "big shots" from the auto companies are living in huge homes, sending their children to the best schools, never worring about where their next dollar, food, heat for their home, will come from. I hate to see winter come on because I can hardly afford to heat my small home anymore, but these people probably have all the extras and never have to worry! And for what? Just what does a president of a college do? Or the CEO of a large company, what do they do? Does anyone really know? I doubt it, these people can give us a line of baloney and most people will believe them! Me ...... not so much.

September 06 2013 at 10:47 PM Report abuse rate up rate down Reply
1 reply to Kay's comment
chrispnet

Absurd. The price you pay for your goods and services is hardly reflective of the CEO pay.

Case in point:

GM sells 16 million cars per year. If they pay their CEO 50 million, that is three dollars per car.

If you are looking for a labor culprit for the price of your goods and services, look at the rank and file. Their compensation is grossly more weighted on the product price than the CEO.

Wake up.

September 10 2013 at 2:42 PM Report abuse rate up rate down Reply
drcutlass

My son has to pay on average 150.00 dollars for a college course book. Really? 150.00 dollars.
These colleges have turned into a greedy money making buisness. And our kids will pay the price in the long run. Colleges are supposed to be a place of higher learning, they have turned into a wall street bank.

September 06 2013 at 7:29 PM Report abuse +3 rate up rate down Reply
1 reply to drcutlass's comment
Kay

Agreed.....I had to loan money to my grandchild for books this semester! A ridiculous amount but for this grandchild to attend class it had to be done and I really didn't mind but get upset at the amount these higher ups in the colleges make for doing what?

September 06 2013 at 10:37 PM Report abuse rate up rate down Reply
stevendy1

its pure greed, just like the healthcare system--bot are run on " how much can we get"

September 06 2013 at 7:21 PM Report abuse rate up rate down Reply
1 reply to stevendy1's comment
chrispnet

So is your business.

September 10 2013 at 2:44 PM Report abuse rate up rate down Reply
anthonygolfbones

I would rather see overpaid teachers than CEO\'S. How much would the cost of some of the things we use on a daily basis go down if billions of dollars weren\'t given in bonuses each year to people who don\'t even produce the product. You never see Hyundi or Kia or Toyota in the paper boasting on the 35 million dollar bonus given to the CEO of the company and they offer cars with more bells and whistles and a better warranty and assembled in America at a cheaper price with union labor.

September 06 2013 at 7:02 PM Report abuse +2 rate up rate down Reply
Larry

You can blame presidents or CEOs, but their pay is usually a small portion of the total. It's more like the co-dependent relationship between legislative branches and government workers; you support me and I'll approve above-market wages for your position.
The entire education system is broken and needs to be re-evaluated, from textbook cost to professor salaries to all the infrastructure. The bubble has been caused by government financing that makes college attainable for all, but affordable for few, with a decades-long yoke of debt and no direct relationship to an appropriate career.
IF public education were held to the same standards as for-profit colleges, there would be published rates of employment for majors with likely pay scales. Based upon this info, up front, students could make much better choices about where they go and what they take.

September 06 2013 at 6:53 PM Report abuse +1 rate up rate down Reply
druid0621

And over-paid hospital CEOs are a major reason why health care is so expensive. The guy who runs Mt. Sinai in NY gets paid a staggering $4.5 mil/year - and his executive team isn't far behind. This is atrocious and immoral - and why the health care industry takes advantage of sick, scared and desperate people.

CEOs of all kinds are overpaid. Who really needs to make more than $500,000 a year?

September 06 2013 at 5:58 PM Report abuse +4 rate up rate down Reply
goodgrief61945

And this is just now news??

September 06 2013 at 5:27 PM Report abuse +1 rate up rate down Reply