American Morning

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December 29th, 2009
06:30 AM ET

Educating America: The big business of the SAT

The College Board says all revenues from its products are reinvested into improved or additional services that support its mission.
The College Board says all revenues from its products are reinvested into improved or additional services that support its mission.

By Carol Costello and Bob Ruff

During the 1950s, "What's My Line" was a popular television show featuring celebrity panelists trying to guess the occupation or identity of a real person. The panelists were given a hint and then asked the person a series of questions.

Imagine this. Had the panelists been asked to guess the name of an American organization based on the following hints, how many would have guessed correctly? And how many would have guessed that it's a nonprofit organization?

  • Its business is education.
  • Its president makes roughly $900,000 in salary, benefits, and perks.
  • 12 of its executives make more than $300,000 in salary and benefits.
  • Total yearly revenues hover near $600 million.
  • Students are its main consumers and it charges them $45 each time they use the featured product.
  • If a student wants the product faster, he gets charged more.
  • If a student wants detailed information on the product, he gets charged more.
  • And if if the student wants to buy by phone, that's extra too.

If you've followed our "American Morning" series this week you may have already guessed that we're talking about the College Board, which owns the SAT – a test required for entry into the nation's most competitive colleges. Critics say that that with its highly-paid executives and big business outlook, the College Board doesn't look or act very much like a nonprofit educational institution that earns tax benefits from the IRS.

Watch: SAT's big business Video

Fairtest is a consumer watchdog group that opposes most standardized tests. It has criticized the SAT as a test that isn't fair to students who can't afford college prep classes designed to "beat" the test. The group also says the College Board is placing more emphasis on making money than fulfilling its mission – to connect students "to college success and opportunity with a commitment to equity and access."

Fairtest's Robert Schaeffer: "[The College Board] is a huge business, multiple hundreds of millions of dollars a year in tests and test prep material that come out of our parents' pockets and into the pockets of test makers – money that should be spent on real education."

Not so fast, says the College Board. In a statement to CNN, it said:

"The College Board is a not-for profit membership organization governed by 30 trustees...We do not generate profits or 'make money.' All revenues from our products, services or grants are re-invested into improved or additional services that support our mission."

Some of the the organization's revenues, says Laurence Bunin, the board's senior vice president for operations, go to "free programs and services. Each year we give away 30-40-50 million dollars worth of free services to low-income students."

Who's right?

Is the College Board justified in paying big salaries to attract and retain talented people to improve the SAT? And are all the board's money-making activities a good thing if it continues to funnel free services to deprived students? Or, as Fairtest suggests, has the board lost site of its original mission by spending too much time and energy generating revenue?

There's a lot at stake. More than a million students take the SAT each year.

Originally posted September 1, 2009.


Filed under: Educating America • Education
soundoff (28 Responses)
  1. Kay

    The SAT, ACT, and GRE are all about determining the pattern that fits the question. If you do not believe this, then ask yourself why you are not allowed to use a calculator for algebra or any other math section. Yes, I think there is some skill needed for doing this long-hand, but we are allowed calculators in class, they are even REQUIRED for upper-level classes.

    I have taken all three of these exams multiple times (and received good scores) however, they do not measure your intelligence or your ability to be successful. If they do, then why do they tell you to choose the "best" answer instead of the "correct" answer? Because the "correct" answer is debatable, whereas the "best" answer is subjective. This is also the case with any comprehension question or witting section, all you get is a score – where is the published criteria for how that score was achieved? They consider it "propriety data"!!!!! In other words, it's confidential and you have to TRUST them. Does that sound like RATIONAL LOGICAL exam criteria?

    If you look at entrance requirements into Universities, more and more are placing less and less weight on these exams and are taking a holistic approach to applicants. Good radiance to them all.

    January 27, 2010 at 6:49 pm |
  2. Bill

    The college board provides a service to colleges and universities and they pay for that service. Students and parents pay for the information that is provided by the exam. Does it predict college success, no. Does it provide some students and colleges with information that helps them with selecting some students, yes. Does America like to sort and select folks, yes. So the non-profit, college board continues to keep in place our need to sort and select people and tries to help some students who can't understand that taking this exam is another way to sort folks. I believe the college board will find a way to continue to do what it does...until colleges decided it can sort and find the right students without the exam.

    January 25, 2010 at 6:26 pm |
  3. Minny Wild

    No non-profit should be allowed to pay their staff that much money. No one needs to earn that much money.

    January 25, 2010 at 1:39 am |
  4. Autumn

    I took the SAT last year and it doesn't help you at all like many other people have said it only tests you on how well you take a test. Now I am a terrible test taker no matter if I know the material or not. I even took classes and bought that so called prep book which did nothing for me. I got a low score despite all of my prepping and the schools I applied to only saw that score non of them even cared to look at how awesome my grades are or what I have done to help out my family or anything. They only gave a crap about that score. It's really a blow when you're a smart kid and you get shot down by colleges that see that crap test as reflection of your ability to succeed (or not) in their school.

    January 15, 2010 at 11:59 am |
  5. seiscat

    SAT prep schools can make a difference in scores and part of that is linked to intelligent guessing. Any test can be gamed to some degree.

    December 29, 2009 at 10:43 am |
  6. ray lafrance

    i would like to ask did the people on the hill get their cost of livein rase...according to CONSUMER PRISE INDEX THE COST OF LIVEING DIDN'T GO UP.......it didnt did here everything went up...my ssi didnt...are the smokeing something.... ask someone on the hill i sure would like to know

    thank you

    December 29, 2009 at 8:38 am |
  7. Tom

    I'm so glad to see that many of these posts that make claims about standardized testing are based solely upon a person's belief. For example, the SAT and ACT do not have any pattern to the correct answer, that is nothing more than a sales pitch by such nice places that help you "prepare" as Kaplan and Princeton Review. And it is surprising that people are upset of $900,000 when execs on Wall Street are still making that much in just a fraction of the year while taxpayers are bailing out those companies. Tests do not dumb down curriculum, in fact they are need more now than ever because the curriculum has been dumbed down.

    December 29, 2009 at 7:58 am |
  8. Debbye Harrison

    My daughter is a missionary in Chile. She makes $18, 000 a year. That's a non-profit's salary. I teach kids so that they can take the SAT and pass College Board's Advance Placement tests and I make $40,000 a year and I have 26 years experience. Do I think their salaries are too high? Do I think they are non-profit?

    December 29, 2009 at 7:45 am |
  9. Mike Z

    It really makes me sick how these high ranking people GET AWAY with what I call THEFT. No one deserves these SALARIES. If the president makes $400,000, then these "thieves" should be making a very small fraction of that, by comparison.

    December 29, 2009 at 7:43 am |
  10. keith shiver

    News Flash! Not for profits have been scamming the system for many years, think churches...the big joke in the financial sector is that the non-profits who have a "mission" other than increasing shareholder value is to make large profits and call them "officer salaries". The basic reality is that we are allowing "education" to shelter profits similar to "religion". If we stipulated in our tax code that non-profits in the "education" or "religion" sector were required to limit officer salaries to $250k per year, I would imagine you would see a rush for the door to for-profit category or a new category that exempted these executives permitting them to increase their salaries or benefits packages.

    December 29, 2009 at 7:39 am |
  11. David in SC

    There are several problems with the 'high' executive salaries.

    1 – They are a non-profit. As a non-profit there is an idea that someone is doing this for the higher good. Is the money in the organization really doing good or is it just a money making machine and they are avoiding paying taxes by being a non-profit?

    2 – Are the executives getting these high salaries and the average worker being paid a smaller amount and being told they are working in a non-profit related to education and they should be doing this for the love of education and young people? Probably.

    3 – I am sure the argument is being made that to get good talent you have to pay them. However, with all of the talent looking for work, how can it be continually justified paying these outrageous salaries?

    December 29, 2009 at 7:38 am |
  12. Marlo Thomas Watson

    I don't think that the salaries of the College Board are rediculus. Many expect a non-profit to operate like a business, but do not make the compensation pacage competitive to attract and retain high level producers!

    December 29, 2009 at 7:35 am |
  13. Samuel

    The man claiming they have give away money to low-income students for the SAT's. I just have one thing to say.
    He said " We give away ** millions of dollars towards low income students every year " , after that comment..... Why should low income students have to rely on give-away's to get a proper education?? Why shouldn't EVERYONE get help with a MANDATORY test ?

    December 29, 2009 at 7:33 am |
  14. L. E. Burnette

    As a graduate student, I have seen evidence that the SAT and other standardized tests are bringing about a dumbing down of the curriculum. High school lessons that promoted character education and encouraged higher order thinking are being replaced by lessons that demand "just the facts". This Jeopardy-style education system, as one university administrator so aptly put it, has brought us college"....students that know everything except how to think".

    September 2, 2009 at 5:12 pm |
  15. David

    I don't think $900,000 is a high salary for the president. Managing a big organization like College Board requires a very high intelligence and capability. If he works for a company, a bank or CNN :-), he could make much more money than that number.

    September 2, 2009 at 12:46 pm |
  16. Jimmy

    Everyone always seems to pick on the SAT, but what about the ACT where I grew up it was much bigger than the SAT. And what about other Non-Profits?

    According to aetr.org (http://www.aetr.org/big-profits.php) many non profits are making BIG money.

    Profit as % Revenue

    ACT – 16.2%
    SAT – 9.5%

    Salvation Army – 30.8%
    YMCA – 9.6%

    September 1, 2009 at 12:54 pm |
  17. Dom

    I do not believe salaries are the issue, but I do have an issue with the college board masking as a not-for-profit. The response of the SAT board stating that it did not 'make a profit' was like a slap in the face. I believe the mission should be clearer on the organization and that there should be more accountability to students, which are it's primary customer. And by the way there customer should not be based on its ability to pay if it's truly a not-for-profit. There are colleges and students hurting because of the economy and the SAT board shows no sign of support.

    September 1, 2009 at 9:16 am |
  18. Kaz

    Not only is SAT a way to make money but our entire education system is a profitable orginization. For example the math and science course you take in one school may very well not count in other schools. Which then forces you to pay for more classes and meterials. Even some dagree or qualification may not count, such as nursing.

    September 1, 2009 at 9:11 am |
  19. Randy Hallman

    Re: College Board

    Good story. Now please take a similar look at the Corporation for Public Broadcasting, another "non-profit" entity that takes money from all the taxpayers to provide a soapbox for liberal causes while paying nice salaries to people like Bill Moyers.

    Sincerely,

    Randy Hallman
    Morrisville PA

    September 1, 2009 at 9:06 am |
  20. Jan L.

    YES it is appropriate for executives of College Board to be paid high salaries when you consider the years of lost wages and expense obtaining their education and their years of experience to be on a board. Someone who thinks $300,000 is a lot of money doesn't know how many taxes are taken out and how much of that goes to their student loan payments. They are left with less than half which is just enough to live on in Boston and New York. These people don't have multiple millions. If anyone could do the job it would pay less.

    September 1, 2009 at 8:39 am |
  21. Stephanie

    Why does our media focus only on the higher education process in the USA? We are loosing an international battle over the education of our young and future leaders. Over seas children are subjected to more intense tests in preparation for higher education and spend more per capita on studying for tests than we do in the USA. Why are we looking to soften our countries standards and weaken our children, by making testing organizations out as enemies and suggesting to adults and children that stress and hard work studying are not virtues we as americans treasure?

    September 1, 2009 at 8:38 am |
  22. Julie A. Horn

    Not on SAT have created a business out of a test, but many other tests are making their money too. Teachers have to take over 3 tests now and each cost about 100 dollars. The price is o.k. but it is the teachers that have to take these tests an are constantly having to retake them. Some of the names of the tests are called Content Area and Basic Skills which are timed tests.

    September 1, 2009 at 8:36 am |
  23. JCastle

    Good morning CNN, and Ms. Costello

    I don't blog, however, writing with experience on not for profit organizations ...

    They're not for profit until everyone gets paid. It's about egos at the higher levels. I saved the computer network of one in NYC a couple of years ago and I can guarantee you that egos at the top make many of them oxymorons. It just is what it is.

    September 1, 2009 at 8:35 am |
  24. Bernadette Loesch

    Dear Carol, As a former parent/child advocate I make these comments. It has always been known that the SAT was not and never will be a good predictor of success in college. I personally know of a person who scored flat (200 in each area) in the SAT, then went on to achieve a GPA of 3.7 undergrad, then get two masters' degrees from very well known graduate schools.

    September 1, 2009 at 8:08 am |
  25. Jeff W.

    ^Sorry about the wrong comment post....

    If the money was truly going back into the system to improve it, then these tests would begin to test the UNDERSTANDING of the contect.......not just being able to pick an answer from eliminating others. If this was truly a business that was out there to better the students it claims it's helping, those salaries would be dropped down to middle class status. Aren't they doing the EXACT same thing as teachers but making 4-5x more than them? Honestly, with my girlfriend being a 10th grade highschool teacher, I will bet she does more work that benefits her kids than the test preparation team does for the SAT "improvements."

    September 1, 2009 at 7:44 am |
  26. Mike Armstrong TX.

    It makes me sick every time I see the pay checks that high ranking people get when do you say thats to much money .

    September 1, 2009 at 7:44 am |
  27. Jeff W.

    The SATs are simply tests to see if you can take a test. They do NOT test your knowledge of the information provided but, they DO test your ability on how well you can guess. I took a P-SAT prep course in highschool back in '00 and the course did NOTHING other than simply help me guess at the "best" answer provided. I may not have had any idea that the correct answer even made sense, but it fit the pattern we were taught. It's pretty sad because the kids taking the test are not learning the content of what they are being test on.....they are just learning how to pass a test. How is that going to help them in College and the real world when they are expected to thoroughly understand the topics and subjectively answer specific questions? Anyone can pick an answer from a pattern.......thinking is what separates us from those people.

    September 1, 2009 at 7:39 am |