Investigation of CEO Pay at For-Profit Colleges
Investigation of Executive Compensation at For-Profit Colleges
In the 112th Congress, Ranking Member Elijah Cummings announced an investigation into the compensation packages of top executives at for-profit colleges.
Ranking Member Cummings sent document request letters to the CEOs of 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.
On July 27, 2012, Ranking Member Cummings circulated a memo with preliminary findings from his investigation. Follow the links below to learn more about the investigation.
Five Things You Should Know:
1. U.S. taxpayers paid for-profit colleges and universities $32 billion in the 2009-2010 school year in the form of federal student aid. That’s 25% of the Department of Education’s total student aid program funds.
2. Ranking Member Cummings' investigation found that corporate profitability is the single most important factor in determining executive compensation at for-profit colleges and universities.
3. Ranking Member Cummings' investigation found that certain companies failed to demonstrate any link whatsoever between the compensation they pay their executives and factors relating to the success of their students.
4. 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.
5. Ranking Member Cummings joined with Senator Tom Harkin as he unveiled a report on for-profit education, and the 30 companies that have been the focus of a two-year investigation by his Committee.
Quick Links:
Press Clips
- Read "Profits, Not Student Success, Drive Executive Pay at For-Profit Colleges" from the Chronicle of Higher Education
- Read "Predatory For-Profit Colleges Pay Execs on Profitability" from Think Progress
- Read "Cummings Launches Probe of For-Profit Colleges" from the Baltimore Sun
- Read "House Democrat Probes Executive Pay at For-Profit Colleges" from the Wall Street Journal
Press Releases/Documents
- View the chart, "How For-Profit Colleges Determine CEO Pay"
- Read the Preliminary Memo on the Investigation
- Read the Document Request Letters Cummings sent to 13 For-Profit Colleges
- Read Senator Harkin's report on For-Profit Colleges
- Read a study from Bloomberg on the Compensation Packages at For-Profit Colleges
- Read "For-Profit Colleges Pay Executives Based on Profit, Not Student Success, Report Finds" from the Huffington Post
- Read Cummings Launches Investigation of CEO Pay At For-Profit Colleges