Photo (cc) by marada
This post comes from Christine DiGangi at partner site Credit.com.
College-bound students are increasingly being told to consider their potential salary when deciding where to go to school, because graduating with a debt load that exceeds your annual earnings is practically a guarantee for financial difficulty. Perhaps student borrowers should consider becoming a university administrator, because there’s some serious money in that career path.
Nine presidents of public universities made more than $1 million in fiscal year 2013. E. Gordon Gee, now president of West Virginia University, earned more than $6 million in his final year as president of Ohio State University. His compensation was nearly four times higher than the next-highest-paid public university president, R. Bowen Loftin of Texas A&M (Loftin is now the chancellor of the University of Missouri).
Million-dollar presidents aren’t the norm, but six-figure administrator salaries are (the median is $478,896). The three highest-paid presidents actually rose to the top of the list because they left their positions, and the combination of deferred compensation, bonuses and severance packages greatly elevated their take-home pay.
Mitchell D. Weiss, a finance professor and Credit.com contributor, finds fundraising incentives for executives particularly absurd: Presidents can increase their already high salaries by bringing in money for the university.
“When you have a president that’s making so much, and the reason for it is because he’s so great at fundraising, you have to step back and think, ‘There’s something wrong with that,'” he said.
Lots of money, lots of debt
It’s stunning to see executive compensation grow as students’ education debt soars. The average debt is now nearly $30,000 among student borrowers, and there’s no shortage of people with stories to tell about their crippling education debt. Here’s one recent graduate’s story about how she ended up with six figures of student loans after her parents realized they couldn’t pay for college.
Student loan debt not only reduces consumers’ spending power and ability to reach various financial goals, it can also have a negative impact on their credit. The problem is expected to grow, because college tuition continues to rise much faster than wages.
It’s not a sustainable system, Weiss said.
“Trees don’t grow to the sky,” he said. “At some point, you just top out.”
Salaries vs. debt
Schools and their executives continue to rake in money, because student loans aren’t typically dischargeable in bankruptcy: If you take out a loan to get an education, you have to repay it (it’s not always easy, but here are some tips for tackling student loan debt.)
Here are some of last year’s highest-paid public university presidents and the average debt loads of the graduates they served, according to Class of 2012 figures from the Project on Student Debt:
10. Mark G. Yudof, University of California System
- 2013 compensation — $857,085. (Yudof retired in 2013.)
- Average student debt — $19,671 average for nine campuses. UC-San Francisco’s average student debt was not included in the Project on Student Debt figures.
9. Mary Sue Coleman, University of Michigan at Ann Arbor
- 2013 compensation — $1,037,357.
- Average student debt — $27,815.
8. V. Gordon Moulton, University of South Alabama
- 2013 compensation — $1,072,121. (Moulton retired in July 2013 and died in September 2013.)
- Average student debt — not reported.
7. Michael F. Adams, University of Georgia
- 2013 compensation: $1,074,869. (Adams retired in 2013.)
- Average student debt — $19,621.
6. Michael A. McRobbie, Indiana University at Bloomington
- 2013 compensation — $1,111,924.
- Average student debt — $28,769.
5. Sally K. Mason, University of Iowa
- 2013 compensation — $1,139,705.
- Average student debt — $28,554.
4. Renu Khator, University of Houston
- 2013 compensation — $1,266,000.
- Average student debt — $16,582.
3. Hamid A. Shirvani, North Dakota University system
- 2013 compensation — $1,311,095. (Shirvani left the North Dakota system in 2013.)
- Average student debt — not reported.
2. R. Bowen Loftin, Texas A&M University at College Station
- 2013 compensation — $1,636,274. (Loftin left Texas A&M in 2013.)
- Average student debt — $22,955.
1. E. Gordon Gee, Ohio State University
- 2013 compensation — $6,057,615, (Gee left Ohio State in 2013.)
- Average student debt — $26,409.
The contrast between college executives’ pay and the debt of their students bothers Weiss. He counsels students and graduates about education debt, and he’s often concerned by how much they’ve borrowed.
“Should they have known better? Perhaps,” Weiss said, but that’s not the point. “The schools got paid. The lenders are getting theirs as well. Meanwhile, the borrowers are living in their parents’ basements. How can anyone not take issue with that?”
As for students, they still need to do all they can to take care of their credit. Making loan payments on time will help a student borrower improve their credit, because payment history is very important. Missing a payment because it’s unaffordable can devastate your credit standing.
People with student loans tend to have more debt in general, according to Pew Research Center data. If people are financing purchases with credit cards because student loan payments diminish their disposable income, that’s another way student loans can hurt their credit. Carrying high revolving credit balances is bad for your credit score. (To see how your debt impacts your credit score, you can see two of your credit scores for free on Credit.com, plus a breakdown of the major factors hurting or helping your scores.)
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