Congress to investigate CEO pay at for-profit colleges

The University of Phoenix has a loan default rate of 18.8 percent among students who began paying back their loans in 2009, up from 12.8 percent when compared to students who began repaying loans in 2008.

Among the 13 schools being investigated by the Congressional committee, Corinthian Colleges has the highest default rate, at 36 percent.

Twenty-five of the 100 highest-paid for-profit college CEOs received more in compensation last year than their companies paid in federal taxes, according to the Institute for Policy Studies.

A recent case of a for-profit college CEO who resigned and was given a $5 million compensation package after his school was accused of exaggerating job placement rates might undercut the industry’s position against the Congressional investigation.

Gary McCullough, former head of Illinois-based Career Education Corp., was awarded the package after he stepped down in November, shortly after inflated job placement numbers caught the attention of Accrediting Council for Independent Colleges and Schools, according to a report from California Watch, an organization that tracks the for-profit industry.

Like most for-profit schools, Career Education gets most of its funding – about 80 percent – from taxpayer money.

Students at Career Education’s California Culinary Academy in San Francisco said they were told by recruiters that 97 percent of students there secured jobs in the culinary field, according to California Watch.

Career Education agreed to pay $40 million in a class action lawsuit that resulted from the false job placement claims.

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