On December 12, 2011 Ranking Member Elijah Cummings announced an investigation into the compensation packages of top executives at for-profit colleges.

Cummings sent document request letters to the CEOs of the following 13 for-profit schools seeking copies of compensation agreements for senior executives as part of an effort to determine whether salaries, bonuses, and other compensation are appropriately tied to the performance of students they educate, the vast majority of whom pay for their education with federal tax dollars.

“The American taxpayers fund these schools through billions of dollars in tuition assistance, but there is little evidence that lavish executive pay is linked to the well-being of the students they are supposed to educate,” said Cummings.  “Congress has a responsibility to ensure that taxpayer funds are being used first and foremost for the benefit of students, not to line the pockets of corporate executives.”

Institution

Revenues from U.S. Taxpayers

(e.g. Title IV loans & grants)

Executive Pay

(Top 5)

Apollo Group, Inc. (AZ)

Bridgepoint Education, Inc.

85%

$8 million

$3.8 million

6.5%

$11.5 million

$4.6 million

21.6%

$12.6 million

$3.03 million

36.1%

Devry, Inc. (IL)

$10.9 million

$6.1 million

17.8%

Education Mgmt Corp. (PA)

$12.3 million

$3.8 million

16%

Grand Canyon Education, Inc. (AZ)

$6.3 million

$2.2 million

7.4%

ITT Education Services (NY)

$12.2 million

$6.7 million

26.3%

Kaplan Education Inc. (NY)

**

**

30%

Lincoln Educational Services (NJ)

Between 62 & 96.9%

$3.6 million

$1.01 million

27.7%

Strayer Education, Inc. (VA) *

78%

$6 million

$1.5 million

12.8%

Universal Technical Institute (AZ)

73%

$6.1 million

$2.2 million

12.2%

Background

For-profit schools receive the majority of their funding from U.S. taxpayers in the form of student assistance, including Title IV loans and grants, Title X tuition assistance, and Veterans Education Assistance Act funds.  When compared to public and nonprofit schools, for-profit companies spend a smaller percentage of their funds on student education, reserving more for marketing, advertising, recruitment, and other non-education expenses.  Their student success rates are lower, and their students are more likely to default on loan payments.  Studies have found that CEOs at for-profit colleges consistently make much more than their counterparts at public and nonprofit schools.