Executives Collect $2 Billion Running U.S. For-Profit Colleges
By John Hechinger and John Lauerman
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.
Students at for-profit colleges are defaulting on their loans at three times the rate of those at private, nonprofit institutions, according to data from the U.S. Department of Education, which is tightening regulation of the industry. The graduation rate for first-time, full-time candidates for four- year degrees at for-profit colleges is 22 percent, compared with 55 percent at state colleges and 65 percent at private nonprofit universities.
This is about as clear an example one could want of how much more efficient and productive the public sphere is compared to the private sphere. Of course, all the ideology goes the other way, largely because private enterprises are experts at externalizing their costs, so that they can appear to be more efficient. But as the above passage shows, top executives are able to extract massive paychecks from large private institutions that massively under-perform their public counterparts.
This is also about as clear an example one could want of America's conservative welfare state, the re-purposing of America's welfare state from Reagan onward to specifically benefit America's oligarchy and specific privileged sectors of industry and society.
