Make big money running a college

November 11, 2010 | By | 3 Replies More

Bloomberg reports on the scandalous default rates at the large for-profit colleges, seen in the context of the eye-popping salaries of the executives that run the colleges:

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.

Here’s more information about the problems with the nations large for-profit colleges, including Phoenix University.


Category: Education, snake oil

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (3)

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  1. Erich Vieth says:

    "A quarter of all federal student loan borrowers at for-profit colleges defaulted on their loans within three years of beginning to repay them–more than twice the rate of their counterparts at non-profit institutions, according to new data released today by the Department of Education.

    In addition, students taking out loans at for-profit schools were responsible for nearly half of all federal student loan defaults within the three-year timeframe, even though students enrolled at such institutions made up less than 15 percent of college students nationwide."

  2. Erich Vieth says:

    The Obama Administration and Congress cave on reform of for-profit colleges:

    "The initial draft threatened severe consequences for institutions that churned out large numbers of graduates with outsized debts and meager job prospects: Schools would quickly lose access to the multi-billion dollar pool of federal student aid dollars that supplies the vast majority of their profits.

    But when the Department of Education delivered the final rules earlier this month, they were substantially weakened from the initial draft, adding a three-year grace period before severe sanctions will kick in — a major triumph for the industry’s lobbyists and their relentless pressure campaign on the Obama administration."

  3. Erich Vieth says:

    “Including salary, bonuses and stock options, the majority of chief executive officers at the 13 companies received more than $3 million each in compensation, according to Cummings’ office and securities filings from the companies. The top executives at DeVry Inc., ITT Educational Services Inc. and the Apollo Group Inc., which owns the University of Phoenix, all received more than $6 million, according to the most recent securities filings detailing executive pay.”

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