For-profit colleges have lower graduation rates and higher student loan default rates than their state or nonprofit counterparts. For-profits also receive the bulk of their revenue from federal financial aid programs. What do for-profit CEOs get for steering this crooked ship? Obscene annual incomes, of course. Bloomberg reports:
Strayer Education Inc., a chain of for-profit colleges that receives three-quarters of its revenue from U.S. taxpayers, paid Chairman and Chief Executive Officer Robert Silberman $41.9 million last year. That’s 26 times the compensation of the highest-paid president of a traditional university.
Top executives at the 15 U.S. publicly traded for-profit colleges, led by Apollo Group Inc. and Education Management Corp., also received $2 billion during the last seven years from the proceeds of selling company stock, Securities and Exchange Commission filings show. At the same time, the industry registered the worst loan-default and four-year-college dropout rates in U.S. higher education. Since 2003, nine for-profit college insiders sold more than $45 million of stock apiece. Peter Sperling, vice chairman of Apollo’s University of Phoenix, the largest for-profit college, collected $574.3 million.
Education corporations, which receive as much as 90 percent of their revenue from federal financial-aid programs, are “private enterprise that’s almost entirely publicly funded,” Henry Levin, director of Columbia University’s National Center for the Study of Privatization in Education, said in a telephone interview. “For-profit colleges are reaching into the public trough to finance luxurious lifestyles at the expense of people who are going to have to pay back loans,” said Levin.
The SEC is investigating insider trading at Apollo, according to Bloomberg.
When you juxtapose the insider trading and high CEO pay mentioned above with the inflation of higher education, this is starting to look mightily like a subprime education crisis.