College presidents are making out like bandits. In 2015, Fifty presidents of private colleges received at least a million dollars in total compensation. Nathan Hatch at Wake Forest was the highest paid university CEO. He made $4 million in 2015--more than twice as much as the president of Yale.
The Chronicle also documented what we already knew--the cost of going to college is in the stratosphere. At 100 private universities, it costs a quarter of a million dollars to get an undergraduate degree (tuition, room and board). And those costs are probably underestimated. According to the Chronicle, room and board at Yale costs $15,500. But does anyone believe a person can live in New Haven, Connecticut on $15,500 a year?
On the other hand, the posted sticker price for college tuition is inflated. As the Chronicle reported, colleges are discounting freshman tuition by 50 percent. Thus, a private college that charges $36,000 a year for tuition is actually collecting only about $18,000 due to grants, scholarships and various discounts.
Who gets those tuition discounts and who pays the sticker price? Colleges give grants and aid to athletes, minority students, and applicants with good academic credentials. Only the least attractive applicants pay full price.
The Chronicle's Almanac also contains some useful information about colleges that are in financial trouble. The U.S. Department of Education gives financial responsibility ratings to American colleges. Institutions that rate 1.0 and above are considered financially responsible; college ranking below that are considered not financially responsible.
Not surprisingly, a lot of the schools with low ratings are private colleges with religious affiliations. Northeast Catholic College, for example, received a negative 0.4 rating, and Boston Baptist College drew a 0.8.
These scores are just another sign that the small, non-prestigious, private colleges are in big trouble, particularly schools tied to religious denominations. I wish all these little schools well, but parents are crazy if they allow their children to take out student loans to attend a small private college no one has heard of. There is a good chance these schools will have shut down before their graduates pay off their loans.
Finally, the Chronicle reported almost a quarter of a trillion dollars was distributed in governmental and institutional student aid during 2016-2017, including $153 billion in federal aid (loans, grants and Work-Study). That's a lot of money invested in American higher education in just one year. Does anyone think we're getting our money's worth?
|Nathan Hatch, president of Wake Forest University, made $4 million in 2015|
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