Thiel Foundation To New Crop Of College-Bound Grads: Don't Go

Earlier this year the foundation gave a group of young fellows $100k and two years of mentoring in exchange for quitting college. The experiment is still playing out. But they're accepting applications for the next group. Here, the heads of the foundation make their case.

To overworked high school seniors anxiously filing college applications, we have some good news. You don’t have to go. To 19-year-old college students ripe with talent we have even better news: You can leave.

Your parents won’t tell you this, guidance counselors won’t tell you this, and university administrators, test prep companies, politicians, a nearly $1 trillion student loan industry, and other unscrupulous profiteers won’t tell you that you don’t have to go. They want you to believe that college is a guaranteed gateway to a successful career and that they’ll help you get there. But you already have what it takes to achieve great things and the price for what college offers—a wicked cocktail of debt, status, insurance, and consumption—is a scam.

Last year, the Thiel Foundation (established by Peter Thiel, right) decided to start a revolution. We wanted to get smart kids out of the classroom and to the frontiers of knowledge quicker so they could start building America’s next great innovative companies. We created the 20 Under 20 Thiel Fellowship. We have 24 people under the age of twenty who have decided to skip college—before debt cripples their horizons—and start changing the world through entrepreneurship. In the first few months of their fellowship, they’ve already founded companies, raised capital, won prestigious awards, and put products on the market. We’re now taking applications for the second class of fellows. The deadline is December 31st.

It’s easy to see how people have been lulled into bad choices. For a century, expanding wages made each generation wealthier than its parents, and it looked like having a college degree made the difference. But the future doesn’t look as good as the past.

So-called high-debt borrowers graduate from private universities with an average debt of $53,200, and some with multiple degrees owe $200,000. Although the education bubble resembles the housing bubble in many ways, student loans can be much worse than mortgages—you can’t live in one. Interest piles on by nearly 7% a year, frequently even when you’re unemployed. And, while you can walk away from an unaffordable mortgage, in 2005 Congress made it illegal to walk away from a student loan, even if you declare bankruptcy. There’s no exit.

In recent years, Sallie Mae has paid two of its executives hundreds of millions of dollars to reign over this mess.

So with higher prices, deeper debt, and stagnant prospects, we have to ask, what are colleges good for?

We know what they’re not good for. A recent study found that “After two years in college, 45% of students showed no significant gains in learning. After four years, 36% showed little change.” A year after college, a third of students are doing so well they move back in with their parents.

Seventeen million Americans with college degrees have jobs that only require a high school degree. 2.4 million more graduates are outright unemployed. There’s nothing wrong with being a bartender or cashier, but there is something wrong with a society that tricks 18-year-olds into ruining their lives with student debt through false promises of a positive return on their investment. If college is an insurance policy, then maybe it was issued by AIG.

Over the last 30 years, both public and private colleges have more than doubled their prices, on top of inflation. Average student debt of graduating seniors gets worse by 6% a year. These increases have far outpaced consumer price inflation. They’re climbing even faster than health care. And taxpayers and generous alumni are paying, too. If you count all costs from rooms to research, private universities that grant PhDs spend an average of $63,700 per student every year.

In case you were wondering, if a college degree is worth less than promised, or less than you paid, you can’t get a refund.

But you can say no. You don’t have to play by these empty rules. You don’t have to take the bait. You can accept responsibility for your own education. You can change the world without it.

Politicians and pundits debate what the government can do to end today’s economic stagnation. But a growing economy isn’t created by a political system. It’s created by passionate, innovative people who have ideas that just can’t wait. If you’re under 20 and match this description, join us at thielfellowship.org.

Jim O'Neill is the head of the Thiel Foundation and co-founder of the 20 Under 20 program. Michael Gibson is the vice president of grants for the Thiel Foundation.

Read about the experiences of the current crop of Thiel Fellows—in their own words—here.


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14 Comments

  • Anonymous

    [Indebted] graduate of an Ivy-League university here. College is a scam unless you want to be a doctor or a lawyer (then it's a necessary scam). Got very little in return for what I paid for. I will not force or coerce my kids into going to college.

  • wp-money

    I love your approach to unleashing the amazing skills and creative minds
    of young people today. For many years I have had conversations with
    people here in the UK about the fact that university is NOT the only
    way. My colleague & I work closely with people who are looking for
    alternative ways to work to create a lifestyle not a career. I feel this
    is one area that crosses over with your sentiments in this article.
    It's great to see the success you've achieved, not only for yourself but
    for the many inspirational and innovative youth who will show us all
    how incredible the future can be.

    http://wp-money.ru      

  • sara

    Haha.  I went to Thiel College (in Pennsylvania) and left with $22k+ in debt.   I wish that I had signed up with this Thiel instead!

  • Jesse

    I am the last one to
    take a stand in favor of the traditional educational system. I went to college
    and still spell so poorly, spell check doesn’t work for me. Having been blessed
    with major ADHD, and learning disabilities I spent the majority of my time
    bouncing off the walls and failing senior gym for “excessive, uncontrollable energy.”
    I had a start-up in high school and spent more time trying to secure contracts
    and not getting arrested carrying out guerrilla marketing campaigns then I did struggling
    to decipher what my bitter algebra teacher was trying to convey. I learned a
    tremendous amount in regards to “how to play the game,” the sort of business
    street smarts Michael Ellsberg speaks about in his book Education of Millionaires, its not what you think and its not to late,
    that are just not taught in school. I then spent an extended period living
    overseas and was exposed to a community of young entrepreneurial ex-patriots
    who had established their own economy in Panama, many of whom had no degrees
    and who were crushing it. Somewhere in the middle I sold my soul and had the privilege
    to attended Babson College and it gave me an arsenal of tools unlike any I had
    obtained prior. Pairing what I learned from fighting the good fight outside of academia
    and the norm, and what they taught me at Babson was a wonderfully lethal
    package.

     

    What I think, is
    education is invaluable and that the system needs a monstrous reset. In the interim,
    I would wholeheartedly encourage young entrepreneurs to take an unconventional
    path and to look at things like Y Combinator, The Unreasonable Institute, Peter
    Theil’s Fellowship, The Summit Series, Tom Brown Tracker School, or The
    Wilderness Awareness School. Learn to be a mechanic, a plumber, an electrical
    engineer, get your hands dirty. If you are disciplined, not entirely socially inept,
    and have some semblance of self confidence I would say screw the norm for the
    most part and have at it your way. But don’t neglect the fact that not everyone
    is going to have the courage or the means and or resources to strike out on
    their own without the comfort of conventional academia and the normal path. The
    prospect of amassing major student loans may be less daunting then the notion
    of going for it instead of pursuing a college degree. This is a cultural glitch
    that is being addressed rapidly as tools and programs such as the aforementioned
    become more mainstream.   

     

    The long term fix is
    to re-tool the educational system. There is no quick way to do this, but there
    are institutions like Babson that I think are on the right track, and that provide
    a product that is worth paying for.

     

    Jesse Levin 
    Senior Cultural Chameleon 

    www.archergroupinvestments.com
              

  • Phil McDonald

    I really don't think this is a bad idea. In fact, I would have been the first to sign up for this, If of course the guilt associated with abandoning the rat race so engrained in North American culture hadn't convinced me otherwise. Culture and norms are powerful things. They make us follow the most well lit paths even though they might be leading us astray. We've been told all of our lives university is a ticket to the middle class but we know that just isn't the case anymore. It's time to re-evaluate. 

  • Leo Toribiio

    My collegiate pursuits were interrupted in the mid-sixties when I was drafted into the US Army.  At the end of those two years, I sat down to evaluate what marketable skills I had and the cost of completing a baccalaureate.  From an economic perspective it was no contest; I realized I could be earning good money programming computers and accumulating savings instead of debt.  I also knew that many of the most successful entrepeneurs in both the UK and the US did not have college degrees. 

    Leo Toribio
    Pittsburgh, PA
    http://corticalsense.wordpress... 

  • Michael Martel

    The problem is that in the US we can come up with the idea that the University/college is a trade school - you go to college to be something, engineer, architect, computer programmer, etc.  Higher education in the form of colleges was not meant to be that. It is for learning and developing the thought process so that any number of professions could be pursued. 

    By thinking of college as a trade school we have put a financial value on higher ed just only justifies higher and higher fees.  Let's go back to when only the gifted went to college.  Look to Europe as an excellent model where most high schoolers go on to trade school which provides entry into the vast majority of positions.

  • Brian Bites

    I think a wide ranging indictment of college education is as wrong-headed as is categorical defense of educational practices at the college level. Clearly just as with every field of human endeavor there are high and low quality programs, and majors that are more or less beneficial for career enhancement. Engineering, life sciences, the physical sciences and computer science are all essential to the future economy. The notion that you don't need knowledge, and college level knowledge, for competitive advantage in the new economy is like saying we can all live on McDonald's hamburgers, in my opinion. Without a technological infrastructure that comes from R&D from Universities and government labs, and individuals who are trained to make and design things, there won't be anything for the entrepreneurs to innovate that can't be outdone by China and India. I do wish these fellows success - I'd hope that all of them start the next Facebook. And I wish them much greater success than the average business venture. Perhaps by cherry picking the applicants to the program they will achieve marginally better rates than the average biotechnology company, which is abismal.

  • Gail Gibson

    I love your approach to unleashing the amazing skills and creative minds of young people today. For many years I have had conversations with people here in the UK about the fact that university is NOT the only way. My colleague & I work closely with people who are looking for alternative ways to work to create a lifestyle not a career. I feel this is one area that crosses over with your sentiments in this article. It's great to see the success you've achieved, not only for yourself but for the many inspirational and innovative youth who will show us all how incredible the future can be. 

  • David Kaiser, PhD

    I have mixed opinions here. Higher Ed clearly has some aspects of a bubble, and many of the internal trends (tuition costs) are unsustainable. On the other hand, while it provides no guarantees, graduates on average make more money than those who never attend, so I suspect it provides some value. THe question is, can we create value in a more efficient or effective way? I don;t know. There are certainly some people who don;t need it, Bill Gates is doing just fine. But I would be disinclined to write the whole endeavor off, I think it can be repaired and reformed, although I do admit I'm not sure what that looks like at the moment. Perhaps a re-imagining of the apprenticeship or guild?

    David Kaiser, PhD
    Executive Coach & CEO
    www.DarkMatterConsulting.com
     
    www.Twitter.com/DarkMatterCon
     
    "Time to be EXtraordinary!"

  • Vicky Collins

    I am very impressed by the work Peter Thiel is doing with his 20 under 20 program. He is mentoring some of the brightest young people in the country who come to him with ideas that will some day make a tremendous difference.  Would he be willing, though, to put his $100,000 behind a kid that wasn't so focused and help that child be transformative? Hand picking the cream of the crop seems easy.  I challenge Peter Thiel to also help the rest of the young people out there to change the world.  Most of them are in college looking for their spark.  I believe that is why college is important.  It opens up the eyes of young people to different interests and ideas and gives kids four years to grow and come into their own.  Even if it is imperfect, college is still relevant.

  • Megan DaGata

    I wish that something like this had existed when I was wrapping up HS in 99. I hated the idea of college. Educating myself with a bunch of worthless information for 4 years, getting a degree in something that I would probably never do, and then having to pay for it for the remainder of my life. Not a great outlook, sure, but I was smart. Very smart. I'm still smart, but since I didn't go get that shiny piece of paper the people that pay what is necessary to survive don't give my resume a second glance.

  • Arlene Hache

    I wish there was a Theil Foundation option for Canada.  Unfortunately, our education isn't what we make of it. It is what the profiteering system makes of it. Students and parents have very little if any voice in that system. 

  • Ben Gordon

    People are so quick to forget that experience shapes us the most; nature over nurture.

    3 years ago, when I was 19, I would have thought this program was the best opportunity for me. I haven't learned at the rate I wanted to in college, at least from teachers and class I mean. However, now, looking back, I can say that every one of those years in between I learned so much more just by living through the social situations and understanding how LOTS of people think. I just started my own tech company. Through years of tinkering with computers and programming I have a pretty solid tech knowledge for my age. But, without going to college (graduating in May) I never would have amassed the psychological, sociological and people skills necessary to run a successful business, even necessary to make stout business decisions on a big picture scale.

    Sure, I'd argue that the traditional learning and academic sides of college have been in a downward spiral for years. But I'm a huge believer and practitioner of combinatorial creativity. College offers an insane amount of viewpoints and ideas to consider, morph, change, glorify, create, etc. and these are all from people my age. People that also want to make an impact in the world. With $100,000 at 19 I could have created some good products with my ideas. But they wouldn't be great.

    Peter Thiel, you make good points, but rarely does world-changing insight ever come from a vacuum of experience.