The biggest family in the educational mafia

There is no way an American student can continue their education without handing over hundreds of dollars to behemoth non-profits. Whether its high school students entering college, graduates pursuing a master's degree or exchange students who apply for U.S. universities, they all end up paying the Educational Testing Services (ETS), a nonprofit organization, hefty sums that endorse a lavish corporate structure.

Exempt from paying taxes, from being transparent to public scrutiny and from truly resolving customer-service queries, ETS is seemingly untouchable.

The nonprofit testing organization administers over 50 million tests each year. Some of the most common tests administered by ETS are the Graduate Record Examinations (GRE), for graduate school applicants, Test of English as a Foreign Language (TOEFL) for non-native English speakers, Graduate Management Admission Test (GMAT) for students applying for graduate business schools, Scholastic Aptitude Test (SAT) for applicants to universities, Advanced Placement (AP) and College Level Examination Program (CLEP) exams for substituting classes, and the Praxis series to gain teacher certification.

While ETS maintains they provide a significant benefit to the community, criticism has been raised that ETS is a monopoly, taking advantage of their captive clients who have nowhere else to turn.

ETS was founded in 1947 in response to the absence of objective academic measurements. Prior to its establishment, academic measurements were subjective for each school. What was required at one college varied widely from what was required at another. ETS believed that by having one organization devoted to educational measurement, schools could reap more benefits from standardized practices and greater integration in the educational industry.

ETS earned an estimated $7 million in profits in 2009, less than one percent of its total revenue, $906 million; the remaining $898 million was used for various expenses that the company, because of its private nature, do not fully disclose. Nonetheless, there is little about the nature of such expenses. ETS facilities are located on a 360-acre complex, with swimming pools, tennis courts, a heliport, a private hotel and a residence where the CEO lives rent free, according to the New York Times.

ETS does not pay federal income taxes. In order to be federally tax-exempt, an institution must be classified as a nonprofit organization. Tax exemptions are given to companies that can be seen as providing a service to the community or, in the case of ETS, advancing education. However, many students see a purpose that is anything but educational when they pay hundreds of dollars for electronic tests.

Unlike students applying as undergraduates, who can choose between taking the SAT or ACT, ETS has a monopoly on graduate admissions because they offer the only test considered for acceptance, the GRE. Registration for the exam begins at $140 for students in the U.S. After the initial charge, there is a $25 fee for late registration, a $50 fee to reschedule, and another $50 fee to change the test location.

Not to be outdone, the TOEFL, or Test of English as a Foreign Language Test, can cost as much as $250, and if a student needs to reschedule, there is a $60 fee. Similar to the GRE, the TOEFL is often the only test accepted by universities as proof of English proficiency. For both tests, cancellation three days prior only result in a refund of will half the cost of registration. These costs can be a heavy burden for students living on a tight budget. Considering that it costs only a few cents to grade a multiple choice test and less than two dollars to grade an essay test, many critics of ETS want to know where exactly students' money is going.

According to Randy Elliot Bennett, who did a study on what it means to be a nonprofit organization in the 21st century, the purpose of ETS, as a nonprofit, is not to make money but to further the quality of education. Any money made, according to Bennett, goes only to advance their purpose. One of the biggest critics of ETS is Americans for Educational Testing Reform (AETR), AETR is an organization that monitors the fairness of standardized testing. AETR considers ETS, ACT Inc. and College Board to be the three biggest violators of testing ethics and demands from each one: "reasonable prices, ethical practices and… a commitment to their promise to serve American students and educators as not-for-profit organizations."

One of the most pressing criticisms raised against ETS by AETR is the compensation of their top "nonprofit" executives. According to AETR, Kurt Landgraf, CEO of ETS, receives $997,608 annually—more than twice the salary of the President of the United States, who earns $400,000—while the top five directors of ETS receive, on average, more than $300,000 annually. Crystal Poenisch, a sophomore political science major, was shocked to learn of the nonprofit status of ETS saying, "it's outrageous to be nonprofit and still cost so much, nonprofit organizations should provide services for free." And, while many nonprofits do uphold that value, ETS chooses a different path of exorbitant executive pay at the expense of giving the tests at cost. 
As if their government-endorsed presence in schools wasn't enough to secure their funding, ETS has begun a for-profit subsidiary that sells test preparation material. By taking advantage of their monopoly on the testing industry, ETS has effectively been able to make money by selling a solution after creating the problem. Moreover, the fact that exam study-guides are sold by a branch of ETS further contests principles of equal opportunity for all test takers. It also contributes to a different polemic about the fairness of the tests for students from poor school districts.