A recent report by The Chronicle for Higher Education has found 42 private college presidents made over $1 million in executive pay, up from last year’s figure of 36 millionaire presidents. The list was based on 2011 federal tax data from institutions receiving endowments.

Broken piggy bank with IOU note inside

What hope for tomorrow’s debt-ridden, unemployed college students?

University of Chicago president Robert J. Zimmer was first on the list with $3,358,723 in total compensation. This is an increase compared to former New School president Bob Kerrey’s total compensation of $3,047,703 when he was first last year.  Last year, Zimmer was ninth on the list with $1,597,918 as compensation.

To place the salary in context, the University of Chicago, for the 2011-12 year, had its tuition and fees as $43,780. The average debt of students, in 2012, was $22,663 and 34 percent of students graduated with debt that same year, according to Project on Student Debt.

Last year, when The New York Times reported on the list, Jack Stripling commented on issue that has grown since last year — inflated pay:

‘There’s no indication in these data that boards are retracting in term of presidential pay,’ said Jack Stripling, a senior reporter at The Chronicle. ‘Over the long run, we’re still seeing more presidents who are paid at an elite level.’

One major problem associated with the pay is the focus of universities to attract the best talent for the betterment of the university, despite a major crisis sitting directly in their faces with two out of five college graduates stating their full-time job doesn’t need a degree in the first place.

In fact, student debt has also been a major issue with a recent report by the Project on Student Debt stating seven in 10 college students graduated with debt in 2012 with the average being $29,400 or. As they wrote:

The national share of seniors graduating with loans rose in recent years, from 68 percent in 2008 to 71 percent in 2012, while their debt at graduation increased by an average of six percent per year. Even though the financial crisis caused a substantial decline in private education lending while these borrowers were in school, about one-fifth (20%) of their debt is comprised of private loans, which are typically more costly and provide fewer consumer protections and repayment options than safer federal loans.

The situation is worsening so much that even The Onion joked on the crisis with a story titled “30-Year-Old Has Earned $11 More Than He Would Have Without College Education.” Yet, the response by the board of trustees at these private colleges (and even in public colleges) is surprise at the thought of their president making less, rather than students facing a future of crisis. As Stripling wrote in a recent article over the matter:

College presidents tend to cringe when their compensation makes headlines, but in some cases trustees are disappointed that their leaders do not rank higher on the national pay scale. Such was the case at the University of Pennsylvania, where board members, in 2010, were surprised to see Amy Gutmann trailing 14 other presidents in The Chronicle’s compensation analysis.

This is occurring when, according to a recent Gallup poll, 93 percent of Americans view college as “important.” Moreover, 73 percent specifically cite college as “very important.” Is the point of college to inflate pay of presidents, while students face a bleak future where one in 10 jobs are retail for example?

Journalist Jeff Madrick penned a piece titled “The Real Lost Generation” in the December edition of Harper’s Magazine that explored the prospect of jobs for youths. In the article, he explored an alarming segment of our society— threat of unemployment:

In the past decade, the percentage of teens working summer jobs has fallen nearly to post-World war II lows. The all-time peak, of 50 percent, was in 1978; that figure experienced only minor fluctuations throughout the Eighties and Nineties, and in 2000 it stood at a healthy 52 percent. It is not down to 30 percent. For young people of color the numbers are worse—about one in five for black teens and one in four for Hispanic teens. The farther down a teen’s parents are on the income ladder, the lower this employment rate.

Now it’s obvious this can’t be blamed on the presidents since they (thankfully) have no jurisdiction over national policies. Yet, the median household income in the United States was $51,017 in 2012, while $410,523 was the median pay for all the college presidents. With the latter figure eight times bigger than what households got in 2012 (not much different with the 2011 household figure), why is this allowed to occur?

Colleges, as mentioned before, view their presidents as a celebrity, which gives publicity for the college in the long. Thus, higher pay is given to whoever has the best talent. It is eerily similar to the neoclassical argument, perhaps the “tournament theory” by economists Edward P. Lazear and Sherwin Rosen, that increased pay makes other presidents more productive to get the job.

However, as economists Rod Hyatt and Tonny Myatt argue in The Economics Anti-Textbook, “there are no strong or consistent relationship between CEO pay and firm size, profitability or growth, neither across industries nor over time.” While they referred to private industries, the same can be said for private colleges that have the same mentality.

Though, this refers back to the entire point of college. As Andrew Hacker and Claudia Dreifus remarked in Higher Education?, the point of education is make interesting students rather than interesting presidents. Under what circumstances do six or seven-figure salaries merit anything close to a necessity for the college? Perhaps in a society that values image rather than results.

Though, it’s fitting when wondering on the mass fortune the presidents now hold considering some are given six-figure “bonus pay.” Students enter the colleges, hoping to achieve a well-paying job and moving above their socio-economic class. However, most of them enter a classroom where their professor is probably an adjunct who has low-pay, no benefits and is probably on food stamps. In fact, nearly 70 percent of professors nation-wide are adjuncts.

Students will probably end up in the same the situation their professors are in as the college president (and perhaps the administration as well) reap millions. One microcosm for the status of the United States today is the college regarding income inequality. Income inequality is a subject with a vast amount of articles on it (making it an unfortunate redundant point with no aggressive solutions), but it’s something when it rivals the inequality in 1928.

This is not to suggest inflated pay is the only major problem with education in the United States. There are a myriad of problems with education in general that merits abolishing the social construct we’ve made and forming an entirely new one based on real education, rather than schooling. Yet, this is one problem occurring with a list released every year in the same style the Forbes Top 400 richest Americans list comes out — to show who are the elite in society.

Madrick asked a fundamental question in his column: “What happens when a nation fails its youth?” One consequence can be suggested as college presidents feeling satisfied with their six or seven-figure salaries as students worry on their future. But the question can expand further to: “What happens when a society fails its youth?”

The state of education is in disarray just like the state of capitalism. It is irrelevant and is in dire need of a new construction for students to be served properly. It is just one way to help bring sanity into an inane issue of whether college presidents should be paid millions in their first year.

Photo by Images of Money released under a Creative Commons license.