By Richard Vedder
Probably nothing has lowered the respect of the public for higher education more than the payment of huge salaries and bonuses, compensation far out of line with most public service jobs and with any historical norms. We now have million dollar university presidents (and, of course, two million dollar football coaches). Poor kids borrow buckets of money to pay soaring tuition fees that finance the soaring growth in compensation.
My sidekick Bryan, a Pennsylvania native who reads the Pittsburgh papers religiously, has informed me of the scandal du jour. The Pennsylvania Higher Education Assistance Agency, which supposedly is in the business of helping kids go to college, is also into the business of ripping off taxpayers, by paying top executives perhaps double what they should be getting. Dick Wiley, the head of this nefarious organization, was recently granted a six digit bonus on top of a salary already nearly double that of the governor (Ed Rendell)--and three other top execs got six digit bonuses as well, bringing their annual pay to well over $300,000 a year (Wiley's was closer to $500,000).
Why is this happening? Proponents of this rip off will argue "we have to pay what the market dictates." The reality is most of these payments are pure economic rents --unnecessary transfers of income from one class of persons (taxpayers) to another (the executives). They occur because accountability is nearly absent. I suspect that the day will come when taxpayers will shower retribution on the higher education organizations employing these greedy individuals who look at public employment not mainly as a way to serve fellow citizens, but rather as a way to get rich at public expense.
What is the solution? For starters, I might simply get rid of the Pennsylvania Higher Education Assistance Agency. States should not be in lending business, and scholarships are best administered as universal vouchers available to reasonably good and diligent students on demand, without a huge, expensive bureaucracy. Short of that, some salary caps are needed, even though in principle I abhor price and wage controls. But stealing is stealing, even if it is legal. I would also fire the PHEAA's board and make its employees civil servants like most government workers, with good but not exorbitant rates of pay. If Mr. Wiley doesn't like it, he can go elsewhere.