Sky-High Tuition: Where All That Money's Going

This year, Boston University raised its price tag to more than $50,000 a year, with all costs included. That's about $10,000 more than what it was when I agreed to go there four years ago, and it's now one of the priciest schools in the country.

Yet even in a deep recession with 8 percent unemployment, BU -- and dozens of other expensive schools, both private and public -- can get away with racking up its tuition rates because executives know that enough privileged students will keep sending in applications regardless of the cost.

When raising tuition rates, schools often cite the rising costs of health care, more expensive energy bills or drops in state funding. But salaries account for the majority of most universities' budgets, usually at least half and often up to as much as 70 percent. Yet in the age of populist anger against executives who took in huge cash bonuses at failing financial firms, there seems to be little to no outrage directed at the rich suits who run the country's most financially exclusive colleges.

Thankfully, private universities (which tend to be registered as non-profits) are required to file public tax forms detailing executive pay. And those papers show where the money is going.

At state schools, a third of college presidents get more than a half-million dollars each year. The heads of private universities earn, on average, $100,000 more, according to an annual Chronicle of Higher Education survey.

The biggest earners include Suffolk University President David Sargent, who got $2.8 million in the 2006-07 academic year, according to the most recent tax forms available. Others earned more than $1 million, like Amy Gutmann, the president of the University of Pennsylvania, which charges $50,000 to attend.

Another big recipient is New York University President John Sexton, a former chairman of the state's Federal Reserve, who carried home a check for $1,291,000 in 2006, according to the tax forms available on search site GuideStar. The cost of attending the private school is about $52,000.

Many other college chiefs have salaries that look more like compensation for top lawyers. At BU, which charges more than $50,000, President Robert Brown earned nearly $840,000 in 2006. George Washington University in Washington, D.C., is maybe the most expensive school in the country for its size, nearing $56,000 a year. Its president in 2006, Stephen Trachtenberg, received nearly $700,000.

I'm obviously leaving out truly elite schools like Harvard and Yale, which are just as expensive but arguably offer a much more valuable education and alumni network than these other giant private schools. (Like Pace University in New York, which costs more than $45,000 a year and handed a $535,000 check to its president in 2006, David Caputo.)

And it's not just the university heads. Plenty of vice presidents and other executives take hundreds of thousands of dollars each at these institutions. (You can see for yourself by searching all private universities' tax forms on GuideStar here. Executive pay is around page 20.)

So why hasn't executive pay at high-priced universities caught the ire of the public? "That's a good question," Steven Bloom of the American Council on Education told me. "I don't know if much people are aware of it."

That's probably because the biggest higher-education cause of anxiety for families and students continues to be the rising costs of tuition and other expenses. More and more private universities are approaching or passing the $50,000 a year mark, which is the same figure as the median household income in the United States.

"This is probably on the minds of presidents and chancellors of every institution in the country," said Bloom, the council's federal relations assistant director, "I think because they genuinely believe in making schools accessible for students."

It's not ludicrous to believe that in four years, these mid-level private institutions will be charging an annual $60,000 to students who want to take classes. That's nearly a quarter-million dollars for an undergraduate degree.

But there will still be some people who can afford it.