by Joe Shea
June 1, 2011
HOW TO SAVE AMERICA'S DISTRESSED HOMES
DUMMERSTON, Vt. -- Is college a sucker's game? Billionaire venture capitalist, hedge fund manager and vocal libertarian Peter Thiel thinks so.
The co-founder of PayPal - who was among the first to spot the end of the Internet bubble in 2000, and the housing bubble in 2007 - thinks that higher education is the next overvalued economic sector due to collapse.
It's a legitimate question to ask, now that four years of tuition, room and board at a top-flight private college can cost more than $200,000. Even with financial aid, a student often leaves these institutions of higher learning with tens of thousands of dollars of student loan debt.
So is spending nearly a quarter of a million dollars for a Harvard undergraduate degree worth it? It is, if you buy into the notion that having a name-brand bachelor's degree means you are now able to achieve all the dreams of money and success that comes with earning one.
"It's what you've been told all your life, and it's how schools rationalize a quarter million dollars in debt," Thiel said in a recent interview with TechCrunch.com. "Education may be the only thing that people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It's like telling the world there's no Santa Claus."
Thiel may be a bit melodramatic, but he's not so much questioning the value of education as he is questioning why it costs so much to get a college education, and being bold enough to suggest that at the current time, it simply is not cost-effective to spend that much to get a college degree.
Granted, Thiel got his degrees from Stanford and Stanford Law School, and he certainly reaped the advantages of going to a first-rate educational institution. But Steve Jobs, Bill Gates and Mark Zuckerberg all dropped out of college and went on to start successful, profitable companies.
In the current economic climate, where people with advanced degrees from prestigious institutions are jobless and stuck with huge student loan bills that not even personal bankruptcy can wipe out, Thiel is asking whether talented people might be better served by trying a different path.
Thiel and Founders Fund managing partner Luke Nosick came up with a idea called "20 Under 20," where 20 of the most talented students under the age of 20 that they could find would receive $100,000 over two years in exchange for dropping out of college and starting a company instead.
They received more than 400 applicants, and last week, the first group of 24 recipients (they couldn't settle on 20) received their grants. But one could say that these individuals, like Jobs, Gates and Zuckerberg before them, are the type of bright and motivates go-getters that usually succeed in the world even if they never attend college.
But most people aren't like that. College remains the main pathway into the middle class, and on average, a worker with a college degree will earn substantially more over his or her lifetime than a worker without one.
That's why Thiel's argument is only half-right. Today's four-year college degree is overpriced, and graduate degrees even more so. But the solution isn't avoiding college. The solution is making college the affordable experience that it used to be.
In that golden age between the end of World War II and the end of the Vietnam War, our leaders on the state and federal level made higher education a priority.
A whole generation of veterans - nearly eight million, or about half of all Americans that served during World War II - received college degrees or specialized training that was paid for through the GI Bill.
The economic impact was considerable. According to historian Ed Humes, 14 Nobel Prize winners, three Supreme Court justices, three presidents, a dozen senators, and two dozen Pulitzer Prize winners got their degrees through the GI Bill.
Before World War II , few Americans had a college degree. After the war, college went from being an institution reserved for the elite to a democratic institution where success is based on merit, rather than privilege.
It's estimated that the GI Bill has yielded more than eight times its cost to the federal government, mostly through additional revenues from increased payroll taxes and economic productivity. It also helped to create the modern knowledge economy, the economy that made men like Thiel billionaires.
The social and economic success of the GI Bill prompted states to spend more on higher education, and put the college experience within reach of all who wanted it.
I was among the last of a generation of students that had a chance to get a college degree without going broke. In the fall of 1979, I paid $175 for tuition and $50 in fees for a semester at Holyoke (Mass.) Community College. Even adjusting that figure for inflation, that semester cost about $700 in 2011 dollars.
Today, to take an average course load of 15 credits at HCC, it costs $2,145 - or triple the inflation-adjusted cost I paid 32 years ago. Has HCC gotten three times better? There are few more buildings there than there were when I was there, and the course offerings have expanded somewhat. However, it is still a commuter college, and it is still the first tentative step of the college experience for many.
The difference is that the cost of even a community college education is becoming more and more expensive, and there is less and less financial aid available. Over the past three decades, this has meant that students have had to take out loans to make up for both the higher cost of education and the decline in state and federal aid to higher education.
In short, the massive government investment in higher education between 1945 and 1975 helped create a prosperous economy and a strong middle class. Conversely, the massive dis-investment by government in education since then has affected our economy, our global competitiveness and the stability of the middle class.
That leads to the next part of Thiel's argument, that chasing a degree isn't worth it.
Fifteen years ago, I was accepted into the mid-career master's program at Harvard's Kennedy School of Government. That nine-month program cost about $35,000, including living expenses. I got $10,000 in financial aid, but had to borrow $25,000 to pay for the rest.
I am still paying off that loan. Was it worth going into debt for a master's degree from the Kennedy School? If you use the simple dollars and cents reasoning of Thiel, no. I stayed in journalism and while the degree did increase my earnings slightly, it certainly has not enough to recoup the cost of my year at Harvard.
But by every other measure, my Kennedy School degree is priceless.
I can't put a price tag on the experience of being in one of the most prestigious public policy schools in the nation, of learning from the top practitioners in my chosen concentration of press, politics and public policy, of being part of an amazingly accomplished group of classmates from all over the world, and being able to test my skills and knowledge in a competitive and demanding environment.
I might have been able to make the career transition from sports writer to news editor and award-winning editorial writer without the Kennedy School experience. But having that degree, and the experience and knowledge I gained, made a huge difference in my career trajectory. I'm still in the same small town I lived in before my year in Cambridge, but my personal and professional status has grown, and I believe I can give some credit to the Kennedy School for that.
That is why people still want to go to college and grad school - to gain the skills and knowledge to succeed in life. The trick is making this experience once again affordable for all. More financial aid for students who need it, and more state and federal aid to pick up more of the cost of running university systems, will make this happen.
Randolph T. Holhut has been a journalist in New England for more than 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at email@example.com.