It pays to go to college

So this guy Peter Thiel is starting a fellowship program that will give students $100,000 to start a new business. He thinks it will encourage more rapid innovation. The catch is that they can only do this fellowship instead of going to college for two years [NPR story]. Apparently Thiel has some contrarian tendencies, and perhaps a grudge against higher education. He's done pretty well for himself as a co-founder of PayPal and early investor in Facebook; he's worth around $1,5000,000,000 [wikipedia]. Oh, and by the way, he graduated from Stanford in philosophy in 1989, and then got his JD from Stanford in 1992. All that time at Stanford would probably make anyone hate higher education (Go Bears!). So education worked for him, but this fellowship is about stimulating and accelerating innovation, and from my reading of his Wikipedia page, it sounds like Thiel is an investor, not an innovator. He struck gold with PayPal, which has given him a chance to take risks on lots of start-ups, some of which might do well and others completely fail. He's a hedge fund manager and a venture capitalist, so his job is focused on taking risks and hoping that some of them pay off big (and implicitly this assumes that those few successes will more than make up for the many failures).

All this is fine and good, but now that Thiel is talking about education, I think he may have confused his own risk-taking lifestyle as an appropriate one for society at large. He's presenting the undergraduate degree as being overvalued, and thinks of this like a bubble (as in the dot-com bubble or the housing bubble). There is maybe a point in there somewhere, and maybe in the USA we need to think about whether everyone needs to go to college. I'll throw in the thought that "trade schools" are extremely undervalued, and that promoting real trade schools would be much more valuable to a vast number of people than getting an associates degree from a community college. That's a digression, though, and to get back on track, let me say that Andrew Kelly wrote a nice critique of the fellowship program on (unfortunately) the HuffPo [LINK].  He points out that the fellowship program is taking some of the best students from the best universities in the country, and putting them into a 2-year intensive mentoring program. This is a far cry from devaluing higher education.

For the overwhelming number of American students, going to college is a good idea. Whether it is because of an overvaluation of degrees or not, the numbers simply show that the more education one gets, the higher the salary [SEE FIGURE, SOURCE].  In the present social-economic conditions, trying to argue that fewer people need to graduate from college is damning most of those people to a lower salary tier. While Steve Jobs, Bill Gates, and Mark Zuckerberg all dropped out of college to become extraordinarily wealthy, the graphic and the data show that they are extreme outliers, and that most people who quit college are giving up almost a third of their potential salary.

Okay, my final comment for this rant... I hope the Thiel Fellowship program is wildly successful. No, really! You should go look at the list of young "innovators" [LINK]; they are extremely impressive, and if this 2-year program can get them and their ideas to the next level, that could have a tremendous impact in several emerging fields (I was especially interested in the Energy category). These are clearly very smart, highly motivated people, and allowing them to focus intensely on these ideas for two years is actually a good plan. It isn't for the average American 20-year-old, but for a few it could be really advantageous. My guess is that most of these Thiel Fellows will go back to school, and then on to graduate school, because they won't be satisfied picking things up along the way. When it comes to extremely technical fields, it actually is more efficient to work through all that fundamental material before just jumping in and cobbling together the pieces as you go along. But we will see.