<p>I am surprised the dollar figures are not even more, especially at large state U’s. Running Minnesota, Berkeley, or OSU, for example, is every bit as challenging as most Fortune 500s.</p>
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Not most of them. Very few schools have income or endowments in the billions.</p>
<p>One of the problems with the inflation of salaries at the top is the collateral effects on those around them. In order to justify the salaries, they need to have more people reporting to them with more important titles, meaning they get paid more too, and it trickles on down. It leads to a big expansion of the administration and the administration’s cost, far beyond just the president.</p>
<p>My alma mater is on this list. It costs about $500 per student to pay for the president.</p>
<p>notrichenough–I’ll disagree-most state flagships have revenue and endowments that exceed that figure, many private schools, 75+ have endowments alone over a billion, add in tuition and other revenue and the number of schools that manage a million or more is quite large. The mean endowment size for all US Colleges and Universities is $90 million.</p>
<p>As in most highly paid positions, a great performer is well worth a high price. A CEO in a corporation can add billions to the shareholders’ value by adroitly managing products, costs, etc. The problem is the average or below average performer - they take their pay cues from the superstars, and if they get fired they often walk away with millions more. Compensation committees almost always look at companies of similar size and type to set CEO pay, which tends to perpetuate high levels of pay for anyone who holds the job.</p>
<p>University presidents have a somewhat more nebulous bottom line than corporate CEOs, so the possibility of overpaying an average (or worse) performer is much higher.</p>
<p>University presidents are often responsible for raising hundreds of millions of dollars annually, managing vast and diverse enterprises, etc. Often overlooked, though, is the strategic aspect of the position. A good president can counteract the natural inertia of academics, kill off weak programs and fund those where the school can be a leader. That takes motivation and determination, as no faculty member or department is likely to acknowledge their mediocrity. </p>
<p>A lot of Carnegie Mellon’s success can be attributed to a series of visionary presidents, starting with Cyert in the 70s.</p>
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Wikipedia lists about 70 schools that have endowments greater than $1bil as of 2011. About 25 are public by my rough count.</p>
<p>That is out of, what, 3000+ colleges and universities in the US?</p>
<p>[List</a> of colleges and universities in the United States by endowment - Wikipedia, the free encyclopedia](<a href=“http://en.wikipedia.org/wiki/List_of_colleges_and_universities_in_the_United_States_by_endowment]List”>List of colleges and universities in the United States by endowment - Wikipedia)</p>
<p><a href=“http://www.nacubo.org/Documents/research/2011NCSEPublicTablesEndowmentMarketValues319.pdf[/url]”>Page not Found;
<p>A little more accurate source that Wiki–you get down to about 150th in the rankings, add in tuition and other revenue and there are a lot of colleges that have a billion or more money under management–of those 36 presidents are making over a million–big deal. Get to the 150th ranked business in the nation and that CEO is probably north of 20 million at least. I just checked some schools in the 600 range and with tuition alone for the size of the school and cost, they manage over a billion with those funds, then add in revenues for sports, etc. and then the endowment fund and you are well over a billion. Heck the schools in the 800 range manage 1/2 billion when you add in tuition and endowments.</p>
<p>Not surprised to see UPenn top the list. It’s known as the party Ivy full of rich kids, and I guess rich administrators. Glad to see tuition being well spent.</p>
<p>And yes, the main job of the head is to make money for the college. But the job is easy when tuition outpaces inflation every year. Just increase tuition (again) and problem solved!</p>
<p>And guess where most of the money earned is being spent? On administrators. In a period of 20 years, administrative expenditure per student increased by 54%. It’s ironic how they put administrators in charge of raising money to hire more administrators and increase their own salaries.</p>
<p>Many of the salaries are nothing short of obscene and outrageous. I find it disgraceful that many of these schools have presidents making ridiculous sums of money. These are not corporations! These are universities and I find it disgraceful that a person can make over a million dollars at a rinky dink school with a small endowment where most grads will find themselves unemployed or unemployable. These students are being saddled with debt that they will never be able to repay while the president is stockpiling cash. Sorry, but there is no way the president of a school like Stevenson (?) should be making this kind of cash…</p>
<p>No ifs and or buts. I am sure this guy didn’t bring millions in contributions and funds to this school with a paltry budget and endowment!</p>
<p>A watchdog group needs to be formed to fight this sort of fleecing. If I were an alum, I would try to bring a class-action lawsuit to try to stop this nonsense!!!</p>
<p>“A President could have a positive impact on a school. On the other hand I bet it is a pretty hard job to screw up.”</p>
<p>Ask Larry Summers about that. I think the opposite is true. It’s hard to have a big positive impact on an institution with a ton of inertia, especially when you don’t have the power to control the faculty. But it’s pretty easy to attract bad press if you stick your foot in your mouth.</p>
<p>“And yes, the main job of the head is to make money for the college. But the job is easy when tuition outpaces inflation every year. Just increase tuition (again) and problem solved!”</p>
<p>Clonetox, guessing you don’t understand supply and demand? That being said, demand in this case is not in a free market since the Federal Government is supplying a considerable amount of the tuition in the form of student loans. </p>
<p>As to the compensation of the Presidents at these Universities, as most have noted, they run a very large enterprise, if they do it successfully, they should be compensated commensurately. If that means over $1 million per year, and the university boards/trustees are happy with it, so be it.</p>
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<p>The supply and demand model presumes rational behavior as applied to consumer demand. Consumers do not behave rationally when the federal government hands out loans like candy and then provides IBR and other government forgiveness programs to encourage people to take out loans.</p>
<p>Even “not-for-profit” universities are being run like for-profit universities. The university system is turning into a large scam.</p>
<p>Much of the increase in tuition is being spent on increasing the number of administrators and increasing salaries for administrators. If we could run the same universities 30 years ago with 1/5th the number of administrators, I don’t see why we can’t do it again. Now, universities are large, inefficient, bureaucratic messes that are run like for-profit corporations eager to enslave the young generation into a life of repaying student loan debt so that the Boomer administrators can live off their million dollar salaries and pensions. It’s almost comical to look at these salaries when 50% of recent college grads are either unemployed or underemployed.</p>
<p>clonetox, you are correct, as I and many others have pointed out, that the system is propped up by the massive amounts of government funded loans and the subsequent forgiveness of such by Obama. That being said, the entire system is outdated but continues on due to the funny money coming from our federal government (i.e. the taxpayers). Take much of that away and the supply of students will dwindle and the cost of a higher education will plummet with it. Alas, this won’t happen, so other forms of higher learning have entered the picture that can deliver the same message at a far lower cost. After all, what’s the difference between sitting in a lecture hall with 500 students versus watching that same lecture, and possibly better ones on the same subject, on line? Not much.</p>
<p>As you have pointed out, “Consumers do not behave rationally when the federal government hands out loans like candy”, so this charade will continue until the government stops acting like every day is Halloween. Again, we all know this wont happen, as the government now seeks out those that somehow didn’t hear about Halloween and brings the candy to them. It’s all part of the entitlement snowball that seemingly will continue on for four more years.</p>
<p>“As you have pointed out, ‘Consumers do not behave rationally when the federal government hands out loans like candy’”</p>
<p>Exactly.</p>
<p>If there is no price sensitivity every market gets unbalanced.</p>
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<p>Nice rhetorical point, but dubious on the facts. Federal student loans are subject to annual and aggregate maximums. Freshmen may borrow up to $5,500; sophomores up to $6,500; and juniors/seniors up to $7,500 annually, up to an aggregate maximum of $31,000. Compare those annual limits to annual tuition of $40,000+/year and total COA in the $55,000 range at elite private colleges and universities, and it becomes clear that federal student loans are NOT the engine driving the higher tuition train. The students who are getting in big trouble with college loan debt are by and large borrowing from private sources–in some cases the colleges themselves, in other cases private lenders.</p>
<p>Also, the Obama loan “forgiveness” program is extremely limited in scope. The people eligible for actual forgiveness are those who have made regular payments for at least 20 years and are not in default; even then, it is only federal loans that are forgiven, not private loans. I frankly can’t imagine an 18-year-old college freshman sitting down and saying, “Gee, maybe I’ll take out the maximum $5,500 federal loan to help pay my $40,000 tuition bill, because if I just pay it off for 20 years without defaulting, the rest of it will be forgiven.” Not happening.</p>
<p>There’s a related program called income-based repayment that limits loan repayments to 10% or 15% (depending on when the loans were taken) of discretionary income (i.e., income above 150% of the federal poverty level), but again to be eligible you must not be in default; the program applies only to federal, not private loan; and it applies only to loans taken out during specified time periods. It’s estimated as many as 1.6 million borrowers may be eligible for income-based replacement, but that’s a tiny fraction of the 36 million who have outstanding federal student loans. And so far, only a tiny fraction of those eligible have signed up for the program. So it’s difficult to see how these extremely limited forms of loan “forgiveness” could be fueling student debt and driving up tuition, when only a tiny fraction of borrowers are eligible, only a tiny fraction of those eligible know about the programs and use them, and at the time a borrower is making the decision to borrow, said borrower has no idea whether she will ever be eligible for the program. That dog don’t hunt.</p>
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<p>From what I remember, students were kind of upset about his package when he got hired, but Northeastern students like to complain about money. One big issue was his housing, because he is the first president to have an official residence provided by the school – a five story Beacon Hill town house right on Boston Common. And this residence is significantly further from campus than many university presidential residences in precisely the direction that would jack up the real estate cost. It’s far enough that the quaint idea of having the president right there as part of the campus community doesn’t really work at all.</p>
<p>bclintonk, perhaps I should have clarified, I speak not only of federally backed loans, but also give aways like Pell Grants. Pell grants have more than doubled since 2008, from $16.1 billion in 2008 to an estimated $36.4 billion in the coming fiscal year. Additionally, Federally backed Student Loan volume has rocketed in that same time. So bclintonk, yes, without a doubt, more federal money has assisted greatly in driving up the cost of education.</p>
<p>But if you actually look at who gets Pell Grants, and then look at where Pell Grant recipients tend to go to college, you’ll realize it isn’t Pell Grants, either. The median income for a family of a student with a Pell Grant is 15K, the average being 20K. Most Pell Grant recipients will go to much less expensive colleges, with 77% going to colleges that cost less than 20K. I don’t see how you can make that claim that Pell Grants are responsible.</p>
<p>Also, during 4 years in the Bush administration, there were no increases in Pell Grant appropriations, and yet college costs increased during that time as well.</p>
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<p>No, I think you’re mixing up cause and effect. At public colleges and universities, tuition increases in recent years have essentially just offset cuts in state appropriations. Facing rising tuition, more students are seeking federal FA, and the programs have expanded to meet a portion of that increased demand, but only a portion. So essentially what we have is 1) states de-funding higher education, 2) public colleges and universities feeling they have no choice but to make up the difference on the backs of students, and 3) the federal government stepping up to, in effect, pick up a portion of what states traditionally did, albeit through indirect means of Pell grants and student loans rather than direct appropriations to universities, as the states did.</p>
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<p>To amplify on skrlvr’s point: look at what percentage of students at elite colleges and universities get Pell grants. It’s a really, really tiny fraction, often as little a 5 or 6%. Then compare the average size of a Pell grant to tuition at those schools; again, it’s a tiny fraction. There’s just no way of doing the math that would support the claim that Pell grants are driving up tuition costs at those institutions. Even many public flagships don’t have large numbers of Pell grant recipients; they tend to go to community colleges or relatively inexpensive local 4-year public commuter colleges. The UC system in California is a major exception, with impressively high numbers of Pell grant recipients. But it’s pretty clear the UC schools have been absolutely hammered by state budget cuts.</p>
<p>I think two things are driving higher tuition costs. At public universities, it’s state budget cuts. At elite private universities, it’s the student services “arms race”–schools adding fancy new athletic facilities, student centers, performances spaces, on-campus entertainment, and lots of other bells and whistles, essentially in a consumer-driven competition for which schools can make themselves most attractive by pampering students with the most luxury goods and services. And all that extra spending only helps them in their US News rankings, which reward the schools that have the highest expenditures-per-student. Notice, too, that typically upwards of 50% of the students at elite private colleges and universities are full-pays. They’re not worried about the size of Pell grants or federal student loans (heck, a number of them don’t even bother to use federal student loans, having adopted “no-loan” FA policies). They’re just charging what the luxury end of the market will bear, and providing ever-more luxurious packages of services to appeal to high-end consumers.</p>
<p>It’s very simple math, if the government pour BILLIONS, get it, BILLIONS of dollars into any endeavor it skews the entire market. Are you saying that $36 BILLION in Pell grants and another $149 Billion in Federally backed student loans doesn’t drive up the cost of Education? If so, I’m guessing you believe in Keynesian economic theory…if that’s the case I’m also guessing you either work in the public sector or are a professional student (i.e. professor…)</p>
<p>sklvr, college costs increased during the Bush years because universities have an oversupply of applicants; get it?</p>