Vincent Farnsworth 4:30 p.m., March 15
For-Profit College CEOS Rolling in Dough, Including Bridgepoint
Bloomberg News has a comprehensive story this morning (Nov. 10) on huge sums of money that officials of for-profit colleges rake in. Look at these numbers from a pay/performance standpoint: the graduation rate for first-time, full-time candidates for four-year degrees at for-profit colleges is 22%, compared with 55% at state colleges and 65% at private non-profit universities. The loan default rate at for-profit colleges is three times the rate at conventional colleges and universities. The chief executive of Strayer Education took in $41.9 million last year -- 26 times the compensation of the highest-paid president of a traditional university, says Bloomberg. Harvard pays its president $800,000 a year. Top executives at the 15 publicly traded for-profit colleges received $2 billion during the last seven years from dumping their stock.
Andrew Clark, CEO of San Diego-based Bridgepoint Education, is the second highest-paid executive of for-profits, raking in $20.5 million, says Bloomberg. A company spokesperson says that is an anomaly because of a $19.4 million stock option grant. As reported here in August, Clark, who controls 5.6% of the company's stock, filed plans to sell shares that may be acquired upon exercise of stock options. He can sell up to 100,437 shares per month. On August 5, he acquired 50,297 shares that he had received through an option for 31.5 cents each. He immediately dumped them for $15.05.
Bridgepoint gets 85% of its revenue from federal student grants and loans -- about standard for the industry. Between 2005 and 2009, the Department of Education's Inspector General probed Bridgepoint to see, among other things, if its remuneration to its marketers, who recruit students, was in line with federal regulations. In its most recent quarterly report to the Securities and Exchange Commission filed Nov. 2, Bridgepoint said that if the Office of Federal Student Aid were to assess a monetary liability, suspend or terminate the company's participation in federal loan programs, Bridgepoint could respond to the order.