It’s the year 2015 and college students are met with incredible difficulties. Many face the same troubles that have plagued students since there were first schools and teachers, but some of these problems are new.
The average student loan debt for the class of 2015 is just over $35,000, up $2,000 from 2014, and over 70 percent of students received some form of student loans, according to the Wall Street Journal.
A number of factors contribute to the increase in student loan debt, including the economy, unemployment and government funding. Tuition, however, for private colleges increased at the rate of about 3.7 percent for the past year according to College Board, while unemployment has been decreasing, and the economy is on the upturn.
In fact, Florida Tech has raised tuition about 20 percent since 2009, going from $31,020 to $37,240. The education at Florida Tech, however, is an outstanding one, but the hardships produced by the price are difficult to fathom.
One thing that has increased nationwide along with tuition is the salary of university presidents. As more and more students are forced to take out student loans to afford college, more and more university presidents are seeing their pockets filled. This produces an often-skeptical reaction from students who find their president is making so much money, while asking them to give more and more. After all, many universities are nonprofit organizations.
In 2013, the IRS composed a compliance report of colleges and universities to examine how they pay their taxes. Some of the things that were examined included presidential salaries. To determine a university president’s salary, an institution can use one of three methods: establish an independent body to determine the salary, rely on appropriate comparability data, or contemporaneously document the compensation-setting process.
The report found that oftentimes institutions used comparability data that does not compare their institution with one of similar size, endowment, revenue or assets, they did not meticulously document the salary determination, or the institution did not specify what type of compensation would be received. The purpose of this IRS report was to make sure that these nonprofit institutions are not succumbing to traditional problems associated with for-profit agencies.
Anthony Catanese is the President and CEO of Florida Institute of Technology, and has been so since 2002. Catanese in 2013, was ranked 7th in The Chronicle of Higher Education’s list of highest paid college presidents, raking in $1,884,008. Closer examination of the tax documents for tax year 2012 indicated a base salary of $515,000, and $1,324,982 in a column titled “Other compensation.” When asked for comment on the salary, the president’s office disclosed a few things:
- The 36-member board of trustees determines the President’s compensation, so it would not be appropriate for him to comment.
- The Board of Trustees determines compensation based on the President’s performance, fundraising, and the salaries of Presidents of other universities.
- The President receives compensation for health insurance, fringe benefits and vehicle allowance.
- In tax year 2012, the President received deferred compensation as he came of appropriate age.
Tax year 2012 is not the only year the President received a large compensation however. Just last year, tax year 2014, President Catanese received $913,117 in total compensation, well above the average for private university presidents. This put him at 100th in the Chronicle of Higher Education’s poll for 2014, but is this ranking indicative of a larger, nationwide problem?
Average pay for private university presidents is increasing at an annual rate of about 2.5 percent. Logic follows that better-paid presidents will be more successful at fundraising, and will produce more gifts for a university. In fact, it could be the opposite. Researchers at Boston College Law School found that when donors know that a university president is among the highest paid in the country, they tend to be less likely to donate.
As universities are turned more and more into money-making institutions, and bachelor’s degrees become more common, could it be up to the United States government to change the laws governing universities?
It will be an interesting development as change is already in the air at Florida Tech. This June, Catanese is retiring, and Executive Vice President Dwayne McCay is filling his role as President as a new era is set to begin.