College Presidents Bringing in a Cool Million as Graduates Struggle With Student Loan Debt
Posted By Donna Fuscaldo on January 8, 2016 at 3:16 pm
These days it’s easy for a college degree to cost more than $100,000, even though the average starting salary for college graduates is around $50,000. Yet, presidents of non-profit private colleges and universities around the country are bringing in more than $1 million a year, an amount many college graduates will never see in their lifetime, let alone every year.
Showcasing the disconnect between college students and their college administrators, The Chronicle of Higher Education’s annual survey of compensation for college heads shows a 5.6 percent increase in the compensation of private college presidents from 2012 to 2013, with the median president earning $436,000 in 2013. More telling, the survey revealed that 32 university presidents earned $1 million or more during that year, at a time when graduates are struggling to pay down their student loans or land a well-paying job.
“One $1 million employee is not going to make that much difference (in terms of the cost of college). More important is how much the entire collection of senior management makes,” says Mark Kantrowitz, a financial aid expert. “It is an interesting illustration of the disconnect between college affordability and what the senior management of an institution is paid.”
Compensation could become a presidential issue
The value of a college degree has become a hot topic this year and will be front and center, at least in the minds of the presidential hopefuls next year as they covet the votes of younger generations. Today, student loan debt stands at a record $1.3 trillion and is second only to mortgage debt. Meanwhile, the average person has $32,000 in student loan debt with many graduates having a tough time finding work. Of those that do get hired out of school many are underpaid and struggling to survive, let alone pay back mounting student loan debt. Because of that, compensation for the head of colleges and universities, particularly private ones that charge a lot to attend their school, is causing some public outcry.
When it comes to the top earner in 2013, The Chronicle of Higher Education ranked Columbia University president Lee C. Bollinger as No. 1, bringing in $4.6 million in compensation. Columbia University told the New York Times that includes $1.17 million in base pay, incentive pay of $940,000 as well as other deferred compensation. Bollinger also gets use of a university residence.
Amy Gutmann, the president at the University of Pennsylvania was a close second, earning $3 million in compensation, which includes salary of roughly $1.7 million and a bonus of close to $1.48 million. Meanwhile, the president of High Point University in North Carolina, Nido Qubein, earned $2.9 million, which included a $2.2 million deferred compensation payout, while Yeshiva University President, Richard M. Joel, earned $2.5 million. That compensation comes amid problems at the New York-based University, which got its bonds downgraded to below investment grade last year by Moody’s Investors Service. The school did tell the New York Times the compensation in 2013 was a result of six years of deferred compensation. In 2014, Joel asked that his salary be reduced by $100,000 and additional $50,000 in 2015. Vanderbilt University president Nicholas Zeppos rounded out the top five, earning $2 million in 2013. The Chronicle of Higher Education found that, based on the survey, 32 college and university presidents had compensation of $1 million or more in 2013.
College is big business which means big salaries
While at first blush these salaries are going to have many people crying foul, particularly when college is so cost-prohibitive for many. Not to mention lower incomes students have a tougher time attending and graduating from school than their wealthier counterparts. But, there are two sides to every argument and that is true of $1 million college presidents.
“You can look at this in several ways,” says Kantrowitz. “Colleges are big businesses and need to pay their CEOs as though it is a big business.” After all, these presidents are managing huge budgets and are involved in a lot of fundraising for the school. A big name president is going to draw interest to the school in terms of students and donors, which in turn means more money for the college or university.
“One can argue that colleges are non-profits and should act more non-profit, but then again look how much the head of the Red Cross gets paid or any of these other non-profits,” says Kantrowitz. “It’s amazing that they don’t expect their people who work for a non-profit to work for skeleton wages.” Marty J. Evans, head of the American Red Cross earned $500,000 in 2014.