November 16, 2010

University President Salaries Not A Large Cause of College Costs

The Wall Street Journal put out an article titled 'More Get $1 Million to Lead College' which I read via Yahoo.  It talks about University presidents making $1 million salaries.   I would bet that many people will read this and then conclude something along the lines of "fat cat salaries of university presidents are causing tuition to go up".    But that is really not the case.   You have to realize that even if a university president is making a $1M figure salary that this is not a large amount compared to the total costs of running a typical university.

As of 2006 here are the numbers: 

There were 17.7 million college students.  Source : College Enrollment by Sex and Attendance Status

There were a total of 4,352 colleges and universities.  Source: Degree-Granting Institutions, Number and Enrollment by State: 2006

That is an average of 4,067 students per university.

The WSJ got their information from a study from The Chronicle of Higher Education.   If you look at the chart posted by the The Chronicle of Higher Education in their article on the topic you can see that most presidents have compensation in the range of $200,000 to $600,000.     50% make under $400,000 and 50% make more. 

So if the university professors made a median of $400,000 million in salary then that is a total cost per student would be $400,000 / 4067 students per university = $98.35 per student

$98.35 is a relatively small portion of the money that is spent per student and also very low relative to average tuition bills.    That accounts for 1% or less of the tuition bill at most public schools.   Obviously this 1% does not account for the annual 7-8% inflation in college costs over the past couple decades.

Bottom Line:   University president salaries are not a large contributor to the costs of college.

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