For-Profit CEO Pay Is 26 Times Public University Presidents??

My Vegas fund

Yup.  That’s what the Department of Education reported in February 2011.  Where do you think that money is coming from?

It comes from students and stock market investors, that’s where.  Students invest in tuition in hopes of getting a degree that will help them get a job.  It doesn’t matter if the student invests this money from a savings account, a parent, or gets a student loan for it.  The student is responsible for paying the money, either to the lender or the school.  Tuition is the source of for-profit schools’ cash.  Corporate bigwigs get paid their salaries from this cash.

They also get money from stock options, often very big money.  Each year, the bigwigs are given the option to buy shares of stock at fixed prices.  If the stock goes up, they can exercise the option, buy the stock at the lower option price, and sell it at the higher market price – all in the same day.  Many for-profit school CEOs have made millions of dollars in a single day in this manner (some have made tens of millions of dollars a year this way).  Corporate bigwigs are also given “grants” of stock; they don’t pay anything for these grants, but own the stock anyway.  That’s also worth big money.

Most student loans are guaranteed by the federal government.  If a student defaults, the government pays the balance of the loan (and then pursues the defaulting student in collections).  The lender is made whole by the government.  That’s when you and I – taxpayers – get to foot the bill.

So, how do you feel as a taxpayer, knowing that a portion of your taxes is going to pay for-profit school CEOs who make 26 times as much as their public school counterparts?  Count me as someone who feels sick about it.

Creative Commons License photo credit: Shayne Kaye

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