Friday, August 19, 2011
Tuesday, August 16, 2011
http://seasteading.org/about-seasteading/introduction
At The Seasteading Institute, we believe that experiments are the source of all progress: to find something better, you have to try something new.
But right now, there is no open space for experimenting with new societies. That's why we work to enable seasteading communities -- floating cities -- which will allow the next generation of pioneers to peacefully test new ideas for government. The most successful can then inspire change in governments around the world.
We're opening this new frontier because humanity needs better ways to live together to unlock our full potential.
Why The World Needs Seasteading
The vision of seasteading is an urgent one. We can already see that existing political systems are straining to cope with the realities of the 21st century. We need to create the next generation of governance: banking systems to better handle the inevitable financial crises, medical regulations that protect people without retarding innovation, and democracies that ensure our representatives truly represent us.
Seasteaders believe that government shouldn't be like the cell phone carrier industry, with few choices and high customer-lock-in. Instead, we envision a vibrant startup sector for government, with many small groups experimenting with innovative ideas as they compete to serve their citizens' needs better.
Currently, it is very difficult to experiment with alternative social systems on a small scale; countries are so enormous that it is hard for an individual to make much difference. The world needs a place where those who wish to experiment with building new societies can go to test out their ideas. All land is already claimed -- which makes the oceans humanity's next frontier.
Fortunately, we are bringing this vision closer to reality every day. Read answers to the top 10 questions about seasteading, or learn about our strategy.
This video is from Breakthrough Philanthropy, an evening catalyzing radical advances in technology to address humanity's greatest challenges hosted by the Thiel Foundation, Dec 7th, 2010, in San Francisco. For more info, see the Facebook event page here.
About The Seasteading Institute
The Seasteading Institute was founded in 2008 by Patri Friedman, grandson of economist Milton Friedman. We have received wide media coverage, including stories by CBS Sunday Morning, the UK's Sunday Times, Wired magazine, and many more. As of December 2010, we have raised over $1,000,000, with funding led by Silicon Valley investor Peter Thiel, co-founder of PayPal and first investor in Facebook.
Our mission is to further the long-term growth of the seasteading movement. Our current focus is on enabling the success of the first seasteads by researching the critical engineering, legal, and business problems, increasing public awareness, and building a core seasteading community.
We are a 501(c)3 non-profit corporation headquartered in Sunnyvale, CA.
Learn More
Read our Frequently Asked Questions.
Learn about our strategy to make seasteading a reality.
Discover the seasteading community, online and at live events.
Read our research paper about how seasteading will drive innovation in government.
Stay in touch with our quarterly e-mail newsletter
At The Seasteading Institute, we believe that experiments are the source of all progress: to find something better, you have to try something new.
But right now, there is no open space for experimenting with new societies. That's why we work to enable seasteading communities -- floating cities -- which will allow the next generation of pioneers to peacefully test new ideas for government. The most successful can then inspire change in governments around the world.
We're opening this new frontier because humanity needs better ways to live together to unlock our full potential.
Why The World Needs Seasteading
The vision of seasteading is an urgent one. We can already see that existing political systems are straining to cope with the realities of the 21st century. We need to create the next generation of governance: banking systems to better handle the inevitable financial crises, medical regulations that protect people without retarding innovation, and democracies that ensure our representatives truly represent us.
Seasteaders believe that government shouldn't be like the cell phone carrier industry, with few choices and high customer-lock-in. Instead, we envision a vibrant startup sector for government, with many small groups experimenting with innovative ideas as they compete to serve their citizens' needs better.
Currently, it is very difficult to experiment with alternative social systems on a small scale; countries are so enormous that it is hard for an individual to make much difference. The world needs a place where those who wish to experiment with building new societies can go to test out their ideas. All land is already claimed -- which makes the oceans humanity's next frontier.
Fortunately, we are bringing this vision closer to reality every day. Read answers to the top 10 questions about seasteading, or learn about our strategy.
This video is from Breakthrough Philanthropy, an evening catalyzing radical advances in technology to address humanity's greatest challenges hosted by the Thiel Foundation, Dec 7th, 2010, in San Francisco. For more info, see the Facebook event page here.
About The Seasteading Institute
The Seasteading Institute was founded in 2008 by Patri Friedman, grandson of economist Milton Friedman. We have received wide media coverage, including stories by CBS Sunday Morning, the UK's Sunday Times, Wired magazine, and many more. As of December 2010, we have raised over $1,000,000, with funding led by Silicon Valley investor Peter Thiel, co-founder of PayPal and first investor in Facebook.
Our mission is to further the long-term growth of the seasteading movement. Our current focus is on enabling the success of the first seasteads by researching the critical engineering, legal, and business problems, increasing public awareness, and building a core seasteading community.
We are a 501(c)3 non-profit corporation headquartered in Sunnyvale, CA.
Learn More
Read our Frequently Asked Questions.
Learn about our strategy to make seasteading a reality.
Discover the seasteading community, online and at live events.
Read our research paper about how seasteading will drive innovation in government.
Stay in touch with our quarterly e-mail newsletter
http://www.nytimes.com/1987/02/18/opinion/our-greedy-colleges.html?src=pm
Our Greedy Colleges
By William J. Bennett: William J. Bennett is Secretary of Education
Published: February 18, 1987
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Many of our colleges are at it again. As they have done annually for the past six years, they have begun to unveil tuition increases that far outstrip the inflation rate. Next year, tuition is expected to rise 6 percent to 8 percent - even though inflation during 1986 was about 1.8 percent.
Yale's president, Benno C. Schmidt Jr., attributes his university's tuition hike in part to ''continuing cutbacks of governmental support for student aid.'' This assertion flies in the face of the facts. Since 1982, money available through Federal student aid programs has increased every single year. Overall, Federal outlays for student aid are up 57 percent since 1980. Since 1980, inflation has been just 26 percent. That is why the former chairman of the Senate Budget Committee, Pete V. Domenici, Republican of New Mexico, recently dismissed the claim of huge cuts in student aid programs as a ''myth.''
If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase. In 1978, subsidies became available to a greatly expanded number of students. In 1980, college tuitions began rising year after year at a rate that exceeded inflation. Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible.
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At the same time that higher education has been cutting a bigger piece of the Federal pie, it has also received huge infusions of cash from state governments, from corporations, from foundations and from loyal alumni. The total increase in higher education spending from all these non-Federal sources is staggering. Spending for higher education now consumes about 40 percent of all money spent in America for education.
It is by no means clear that the performance of many of our colleges and universities justifies this level of expenditure. As I said on the occasion of Harvard's 350th anniversary, too many students fail to receive the education they deserve at our nation's universities. The real problem is not lack of money but failure of vision.
Unfortunately, when it comes to higher education, this distinction is frequently lost. Stanford University's vague justification for increased charges - ''new knowledge is inherently more expensive'' - only underscores the lack of focus and purpose at some of our nation's most prestigious universities.
Our Greedy Colleges
Published: February 18, 1987
(Page 2 of 2)
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SINGLE-PAGE
Higher education is not underfunded. It is under-accountable and under-productive. Our students deserve better than this. They deserve an education commensurate with the large sums paid by parents and taxpayers and donors.
That our universities are places where students can receive a good education, or at least learn a lot, I have no doubt. But too often our universities leave education to chance -a good professor here and a great course there. There is too little real and sustained attention to education in the broader sense, to making sure that when our students leave after four years they leave as educated men and women.
It is also false to assert, as some have, that the Reagan Administration's student aid policies deprive disadvantaged students of the opportunity to attend college. In fact, the Administration has consistently sought to redirect aid to the neediest students.
Under the Administration's fiscal 1988 budget proposal, all students presently receiving aid would continue to be eligible for the same dollar amount of aid. One in six of all college students would still be eligible to receive Federal grants. Those less needy would still have access to aid in the form of loans.
ADS BY GOOGLE
One particular Administration proposal, Income Contingent Loans, represents the most serious attempt to improve student aid in 15 years. The loans would permit repayment schedules to be tailored to a student's income. A graduate's payments would never have to exceed 15 percent of his adjusted gross income, and he could have as long as necessary to repay.
An advantage of the Administration's proposals is that they would help make colleges and universities accountable to the prime beneficiaries of their services - the students.
Because students would pay a market-based interest rate, they would bear the true cost of borrowing the additional capital needed to finance tuition increases. Instead of insulating colleges and universities from such market forces, the Administration's policies would make colleges and universities more readily accountable to them.
Higher education clearly provides benefits to society in general. Recognizing this, the American people have generously provided the tax dollars, grants and highly subsidized loans necessary to support higher education. But the chief beneficiaries of a college education are the students. On average, college graduates earn $640,000 more over their lifetimes than nongraduates do. It is simply not fair to ask taxpayers, many of whom do not go to college, to pay more than their fair share of the tuition burden.
The Administration's proposals seek to balance the benefit of loan subsidies to students with their cost to taxpayers. Our colleges and universities should be more willing to shoulder their responsibilities to students, their families and taxpayers. Too often, these responsibilities have been evaded. This we can no longer afford.
Our Greedy Colleges
By William J. Bennett: William J. Bennett is Secretary of Education
Published: February 18, 1987
SIGN IN TO E-MAIL
SINGLE-PAGE
Many of our colleges are at it again. As they have done annually for the past six years, they have begun to unveil tuition increases that far outstrip the inflation rate. Next year, tuition is expected to rise 6 percent to 8 percent - even though inflation during 1986 was about 1.8 percent.
Yale's president, Benno C. Schmidt Jr., attributes his university's tuition hike in part to ''continuing cutbacks of governmental support for student aid.'' This assertion flies in the face of the facts. Since 1982, money available through Federal student aid programs has increased every single year. Overall, Federal outlays for student aid are up 57 percent since 1980. Since 1980, inflation has been just 26 percent. That is why the former chairman of the Senate Budget Committee, Pete V. Domenici, Republican of New Mexico, recently dismissed the claim of huge cuts in student aid programs as a ''myth.''
If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase. In 1978, subsidies became available to a greatly expanded number of students. In 1980, college tuitions began rising year after year at a rate that exceeded inflation. Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible.
ADS BY GOOGLE
At the same time that higher education has been cutting a bigger piece of the Federal pie, it has also received huge infusions of cash from state governments, from corporations, from foundations and from loyal alumni. The total increase in higher education spending from all these non-Federal sources is staggering. Spending for higher education now consumes about 40 percent of all money spent in America for education.
It is by no means clear that the performance of many of our colleges and universities justifies this level of expenditure. As I said on the occasion of Harvard's 350th anniversary, too many students fail to receive the education they deserve at our nation's universities. The real problem is not lack of money but failure of vision.
Unfortunately, when it comes to higher education, this distinction is frequently lost. Stanford University's vague justification for increased charges - ''new knowledge is inherently more expensive'' - only underscores the lack of focus and purpose at some of our nation's most prestigious universities.
Our Greedy Colleges
Published: February 18, 1987
(Page 2 of 2)
SIGN IN TO E-MAIL
SINGLE-PAGE
Higher education is not underfunded. It is under-accountable and under-productive. Our students deserve better than this. They deserve an education commensurate with the large sums paid by parents and taxpayers and donors.
That our universities are places where students can receive a good education, or at least learn a lot, I have no doubt. But too often our universities leave education to chance -a good professor here and a great course there. There is too little real and sustained attention to education in the broader sense, to making sure that when our students leave after four years they leave as educated men and women.
It is also false to assert, as some have, that the Reagan Administration's student aid policies deprive disadvantaged students of the opportunity to attend college. In fact, the Administration has consistently sought to redirect aid to the neediest students.
Under the Administration's fiscal 1988 budget proposal, all students presently receiving aid would continue to be eligible for the same dollar amount of aid. One in six of all college students would still be eligible to receive Federal grants. Those less needy would still have access to aid in the form of loans.
ADS BY GOOGLE
One particular Administration proposal, Income Contingent Loans, represents the most serious attempt to improve student aid in 15 years. The loans would permit repayment schedules to be tailored to a student's income. A graduate's payments would never have to exceed 15 percent of his adjusted gross income, and he could have as long as necessary to repay.
An advantage of the Administration's proposals is that they would help make colleges and universities accountable to the prime beneficiaries of their services - the students.
Because students would pay a market-based interest rate, they would bear the true cost of borrowing the additional capital needed to finance tuition increases. Instead of insulating colleges and universities from such market forces, the Administration's policies would make colleges and universities more readily accountable to them.
Higher education clearly provides benefits to society in general. Recognizing this, the American people have generously provided the tax dollars, grants and highly subsidized loans necessary to support higher education. But the chief beneficiaries of a college education are the students. On average, college graduates earn $640,000 more over their lifetimes than nongraduates do. It is simply not fair to ask taxpayers, many of whom do not go to college, to pay more than their fair share of the tuition burden.
The Administration's proposals seek to balance the benefit of loan subsidies to students with their cost to taxpayers. Our colleges and universities should be more willing to shoulder their responsibilities to students, their families and taxpayers. Too often, these responsibilities have been evaded. This we can no longer afford.
http://www.csmonitor.com/Business/Mises-Economics-Blog/2011/0810/The-higher-education-bubble-has-popped
The higher education bubble has popped
Traditionally, Americans have firmly believed in two core investments: college and home ownership. Then the housing bubble popped. Is education next?
Kennesaw, Ga.'s Kent Webb, left, dad of freshman Rebecca Webb, right, and Ellen McCann, center, from Red Bank, N.J., the mother of freshman student Sydney Houston, center-right, assemble a bed in a dorm room as University of Georgia freshmen move in on Tuesday, Aug. 9, 2011 in Athens, Ga. Investing in college is no longer a sure bet for a good job, writes guest blogger Douglas French.
David Tulis / Athens Banner-Herald / AP / File
Enlarge
By Doug French, Guest blogger / August 10, 2011
A college degree once looked to be the path to prosperity. In an article for TechCrunch, Sarah Lacy writes, "Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe."
Skip to next paragraph
Mises Economics Blog
This is the institutional blog of the Ludwig von Mises Institute and many of its affiliated writers and scholars commenting on economic affairs of the day.
Recent posts
08.15.11
Fiat money turns 40, the tragedy goes on
08.10.11
The higher education bubble has popped
08.03.11
Privatize the highways. And every other road, too.
07.30.11
New victim of patent madness: Spotify
07.29.11
Banks bulldoze houses, despite millions being homeless
Related stories
The Monitor's View: Smarten up college students before adding more graduates
Are higher education skeptics elitist?
The Monitor's View: What's a college grad worth? Washington starts to ask.
Topics
Education Higher Education Colleges and Universities Professional Schools Arts, Entertainment, and Media Media Blogs and Blogging
But the jobs that made higher education pay off during the inflationary boom, kicked into high gear by Nixon waving goodbye to the last shreds of a gold standard, came primarily from government and finance.
In 1990, 6.4 million people worked for federal, state, and local governments. By 2010, that number had grown almost 6 times — to 38.3 million — with many of these jobs being white-collar.
RELATED: Affordable colleges: a new tool for cost comparison
In 1990, the financial sector was less than 7.5 percent of the S&P 500. By 2006, this sector had grown to 22.3 percent of the S&P, and that year the financial sector constituted 45 percent of the index's earnings.
"Prices and wage rates boom," writes Mises.
Everybody feels happy and is convinced that now finally mankind has overcome forever the gloomy state of scarcity and reached everlasting prosperity.
In fact, all this amazing wealth is fragile, a castle built on sands of illusion. It cannot last. There is no means to substitute banknotes and deposits for nonexistent capital goods.
Times have changed.
Last week, HSBC Holding Plc announced plans to eliminate 30,000 jobs worldwide by the end of 2013. The job cuts will affect "support staff where we believe we have created an unnecessary bureaucracy in this firm over a number of years," HSBC chief executive officer Stuart Gulliver said.
Goldman Sachs plans to cut 1,000 positions. Bank of America is laying off 1,500 employees and closing 600 retail branches.
At the same time that banks are trimming their fat, according to a Labor Department report released earlier this month, from May 2010 to May 2011 local governments shed 267,000 jobs and state governments 24,000. Local government employment in May, at 14.165 million jobs, was the lowest since July 2006.
An increase in the amount of real savings, which induces a fall in the interest rate and a lengthening of the production schedule, increases an economy's productive capacity, creating genuine growth brought about by the investment in higher-order goods such as factories and other production assets.
Conversely, easy, cheap credit fools entrepreneurs into believing that society's collective time preference has fallen, enticing them into investing in higher-order goods, such as land, factories, and the like — when in fact the collective time preference hasn't changed, and the demand for higher-order goods is merely a mirage. The result is booms and busts rather than genuine growth.
The higher education bubble has popped
Traditionally, Americans have firmly believed in two core investments: college and home ownership. Then the housing bubble popped. Is education next?
Kennesaw, Ga.'s Kent Webb, left, dad of freshman Rebecca Webb, right, and Ellen McCann, center, from Red Bank, N.J., the mother of freshman student Sydney Houston, center-right, assemble a bed in a dorm room as University of Georgia freshmen move in on Tuesday, Aug. 9, 2011 in Athens, Ga. Investing in college is no longer a sure bet for a good job, writes guest blogger Douglas French.
David Tulis / Athens Banner-Herald / AP / File
Enlarge
By Doug French, Guest blogger / August 10, 2011
A college degree once looked to be the path to prosperity. In an article for TechCrunch, Sarah Lacy writes, "Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe."
Skip to next paragraph
Mises Economics Blog
This is the institutional blog of the Ludwig von Mises Institute and many of its affiliated writers and scholars commenting on economic affairs of the day.
Recent posts
08.15.11
Fiat money turns 40, the tragedy goes on
08.10.11
The higher education bubble has popped
08.03.11
Privatize the highways. And every other road, too.
07.30.11
New victim of patent madness: Spotify
07.29.11
Banks bulldoze houses, despite millions being homeless
Related stories
The Monitor's View: Smarten up college students before adding more graduates
Are higher education skeptics elitist?
The Monitor's View: What's a college grad worth? Washington starts to ask.
Topics
Education Higher Education Colleges and Universities Professional Schools Arts, Entertainment, and Media Media Blogs and Blogging
But the jobs that made higher education pay off during the inflationary boom, kicked into high gear by Nixon waving goodbye to the last shreds of a gold standard, came primarily from government and finance.
In 1990, 6.4 million people worked for federal, state, and local governments. By 2010, that number had grown almost 6 times — to 38.3 million — with many of these jobs being white-collar.
RELATED: Affordable colleges: a new tool for cost comparison
In 1990, the financial sector was less than 7.5 percent of the S&P 500. By 2006, this sector had grown to 22.3 percent of the S&P, and that year the financial sector constituted 45 percent of the index's earnings.
"Prices and wage rates boom," writes Mises.
Everybody feels happy and is convinced that now finally mankind has overcome forever the gloomy state of scarcity and reached everlasting prosperity.
In fact, all this amazing wealth is fragile, a castle built on sands of illusion. It cannot last. There is no means to substitute banknotes and deposits for nonexistent capital goods.
Times have changed.
Last week, HSBC Holding Plc announced plans to eliminate 30,000 jobs worldwide by the end of 2013. The job cuts will affect "support staff where we believe we have created an unnecessary bureaucracy in this firm over a number of years," HSBC chief executive officer Stuart Gulliver said.
Goldman Sachs plans to cut 1,000 positions. Bank of America is laying off 1,500 employees and closing 600 retail branches.
At the same time that banks are trimming their fat, according to a Labor Department report released earlier this month, from May 2010 to May 2011 local governments shed 267,000 jobs and state governments 24,000. Local government employment in May, at 14.165 million jobs, was the lowest since July 2006.
An increase in the amount of real savings, which induces a fall in the interest rate and a lengthening of the production schedule, increases an economy's productive capacity, creating genuine growth brought about by the investment in higher-order goods such as factories and other production assets.
Conversely, easy, cheap credit fools entrepreneurs into believing that society's collective time preference has fallen, enticing them into investing in higher-order goods, such as land, factories, and the like — when in fact the collective time preference hasn't changed, and the demand for higher-order goods is merely a mirage. The result is booms and busts rather than genuine growth.
http://en.wikipedia.org/wiki/Higher_education_bubble
Higher education bubble
From Wikipedia, the free encyclopedia
The higher education bubble is a speculative boom and bust phenomenon in the field of higher education. According to the theory, while college tuition is rising, the returns of a college degree are decreasing[1] and the soundness of the student loan industry may be threatened by increasing default rates.[2] College students who fail to find employment at the level needed to pay back their loans in a reasonable amount of time have been compared to the debtors under sub-prime mortgages whose home are worth less than what is owed to the bank.[3]
In 1987, Secretary of Education William Bennett, Jr. first suggested that the availability of loans may in fact be fueling an increase in tuition prices and an education bubble.[4] This "Bennett hypothesis" claims that readily available loans allow schools to increases tuition prices without regard to demand elasticity. College rankings are partially driven by spending levels,[5] and higher tuition prices are correlated with increased public perceptions of prestige.[6] Over the past thirty years, demand has increased as institutions improved facilities and provided more resources to students.[7] Additionally, schools tend to enroll fewer students as they improve student offerings and increase prices. This suggests that it is in schools' best interest to increase tuition prices as much as possible, so long as financial aid ensures an ability to pay on the part of students and parents.
A 2009 article in The Chronicle of Higher Education related concern from parents wondering whether it is worth the price to send their children to college.[8] The Economist in turn hypothesized that the bubble bursting may make it harder for colleges to fill their classes, and that some building projects will come to a halt.[9] The Boston Herald further suggested the possibility of mergers, closures and even bankruptcies of smaller colleges that have spent too much and taken on too much debt.[10] The National Review proposed that the bubble bursting may also bring down higher education prices.[11] Glenn Reynolds wrote in the Washington Examiner that those who have financed their educations with debt may be particularly hard-hit.[12]
Further speculation as to the higher education bubble was the focus of a series of articles in The Economist in 2011.[13]
Contents [hide]
1 Controversy
1.1 Alternatives to bubble theory: Cost shifting and Privatization
1.2 Additional factors
1.3 Recommendations
2 See also
3 References and notes
4 External links
[edit]Controversy
Study comparing college revenue per student by tuition and state funding in 2008 dollars.[14]
The view that higher education is a bubble is controversial. Most economists do not think the returns to college education are falling.[15] In a financial bubble, assets like houses are sometimes purchased with a view to reselling at a higher price, and this can produce rapidly escalating prices as people speculate on future prices. An end to the spiral can provoke abrupt selling of the assets, resulting in an abrupt collapse in price — the bursting of the bubble. Because the asset acquired through college attendance — a higher education — cannot be sold (only rented through wages), there is no similar mechanism that would cause an abrupt collapse in the value of existing degrees. For this reason, many people[who?] find this analogy misleading. However, one rebuttal to the claims that a bubble analogy is misleading is the observation that the 'bursting' of the bubble are the negative effects on students who incur student debt, for example, as the American Association of State Colleges and Universities reports that "Students are deeper in debt today than ever before...The trend of heavy debt burdens threatens to limit access to higher education, particularly for low-income and first-generation students, who tend to carry the heaviest debt burden. Federal student aid policy has steadily put resources into student loan programs rather than need-based grants (see graph), a trend that straps future generations with high debt burdens. Even students who receive federal grant aid are finding it more difficult to pay for college."[16]
[edit]Alternatives to bubble theory: Cost shifting and Privatization
A different proposal for the cause of rising tuition is the reduction of state and federal appropriations to colleges making them rely more on student tuition. Thus, it's not a bubble rather a form of shifting costs away from state and federal funding over to students.[17] This has mostly applied to public universities which in 2011 for the first time have taken in more in tuition than in state funding[17] and had the greatest increases in tuition[14]. Implied from this shift to away from public funding to tuition is privatization, although the New York Times reports such claims are exaggerated.[17][18]
Another proposed cause of increased tuition is U.S. Congress' occasional raising of the 'loan limits' of student loans, in which the increased availability of students to take out deeper loans sends a message to colleges and universities that students can 'afford more,' and then, in response, institutions of higher education raise tuition to match, leaving the student back where he began, but deeper in debt. Therefore, if the students are able to afford a much higher amount than the free market would otherwise support for students without the ability to take out a loan, then the tuition is 'bid up' to the new, higher, level that the student can now afford with loan subsidies.[19] One rebuttal to that theory is the fact that even in years when loan limits have not risen, tuition has still continued to climb.[20][21] However, that may not disprove this proposed cause: It may simply mean that other factors besides 'loan limit' increases played a part in the increases in tuition.
A third, novel, theory claims that the recent change in federal law removing all standard consumer protections (truth in lending, bankruptcy proceedings, statutes of limits, etc.) strips students of the ability to declare bankruptcy, and, in response, the lenders and colleges know that students, defenseless to declare bankruptcy, are on the hook for any amount that they borrow -including late fees and interest (which can be capitalized and increase the principal loan amount), thus removing the incentive to provide the student with a reasonable loan that he/she can pay back.[22][23] Under this theory, it would be more profitable for the lender if the student defaulted (due to the increases in the amount of the loan after fees and interest are capitalized), and thus there is no free market pressure-type motive for the lender or the college to help the student avoid default. This is especially true because the government, if it is the lender or guarantor of the loan, has the ability to garnish the borrower's wages, tax return, and Social Security Disability income without a court order. [24] Some have called the Federal Government 'predatory' for making loans which will have such a high default rate, since the default rate for Student Loans is projected to reach 46.3% of all federal loans disbursed to students at for-profit colleges in 2008.[25][26]
[edit]Additional factors
Other factors[27] that have been implicated in increased tuition include the following:
The practice of 'tuition discounting,' in which a college awards financial aid from its own funds. This assistance to low-income students by the college or university means that 'paying' students have to 'make up' for the difference: Increased tuition. This factor becomes more pronounced in modern times, since more students nowadays are going to college, which means that there are less State and Federal grant funds available per student.
According to Mark Kantrowitz, a recognised expert in this area, "The most significant contributor to tuition increases at public and private colleges is the cost of instruction. It accounts for a quarter of the tuition increase at public colleges and a third of the increase at private colleges."
Kantriwitz' study also found that "Complying with the increasing number of regulations – in particular, with the reporting requirements – adds to college costs," thus contributing to a rise in tuition to pay for these additional costs.
[edit]Recommendations
Based on the available data, a number of recommendations to address rising tuition have been advanced by both experts and consumer and students' rights advocates:
Colleges and universities should look for ways to reduce costs of instructor and administrator expenditures (e.g., cut salaries and/or reduce staff).[28][29]
State and Federal governments should increase appropriations, grants, and contracts to colleges and universities.[30][31][32]
Federal, state, and local governments should reduce the regulatory burden on colleges and universities.[33]
The Federal Government should enact partial or total loan forgiveness for students who have taken out student loans.[34][35][36][37]
Federal Lawmakers should return standard consumer protections (truth in lending, bankruptcy proceedings, statutes of limitations, etc.) to Student Loans which were removed by the passage of the Bankruptcy Reform Act of 1994 (P.L. 103-394, enacted October 22, 1994), which amended the FFELP (Federal Family Education Loan Program).[38][39][40]
Cut lender subsidies, decrease student reliance on loans to pay for college, and otherwise reduce the 'loan limits' to limit the amount a student may borrow.[41][42][43]
Regulatory or legislative action to lower or freeze the tuition, such as Canada's tuition freeze model, should be enacted by federal lawmakers:[44]
More research should be done: Recognised financial expert, Mark Kantrowitz, issued the following recommendations[45]:
"The National Center for Education Statistics should increase the frequency of the National Postsecondary Student Aid Study to annual, from triennial, in order to permit more timely tracking of the factors affecting tuition rate increases. Likewise, NCES (National Center for Education Statistics) should take steps to improve the efficiency of the data collection and publication for the Digest of Education Statistics, so that all tables will include more recent data. The most recent data listed in some tables is five years old."
"The US Department of Education should study the relationship between increases in average EFC (Expected Family Contribution) figures and average tuition rates. In addition, it would be worthwhile to examine how historical average EFC figures have changed relative to family income when measured on a current and constant dollar basis for each income quartile."
Lastly, in order to offset the costs of tuition, some colleges help students in job searches and job placement after graduation.[46]
[edit]See also
Higher education bubble
From Wikipedia, the free encyclopedia
The higher education bubble is a speculative boom and bust phenomenon in the field of higher education. According to the theory, while college tuition is rising, the returns of a college degree are decreasing[1] and the soundness of the student loan industry may be threatened by increasing default rates.[2] College students who fail to find employment at the level needed to pay back their loans in a reasonable amount of time have been compared to the debtors under sub-prime mortgages whose home are worth less than what is owed to the bank.[3]
In 1987, Secretary of Education William Bennett, Jr. first suggested that the availability of loans may in fact be fueling an increase in tuition prices and an education bubble.[4] This "Bennett hypothesis" claims that readily available loans allow schools to increases tuition prices without regard to demand elasticity. College rankings are partially driven by spending levels,[5] and higher tuition prices are correlated with increased public perceptions of prestige.[6] Over the past thirty years, demand has increased as institutions improved facilities and provided more resources to students.[7] Additionally, schools tend to enroll fewer students as they improve student offerings and increase prices. This suggests that it is in schools' best interest to increase tuition prices as much as possible, so long as financial aid ensures an ability to pay on the part of students and parents.
A 2009 article in The Chronicle of Higher Education related concern from parents wondering whether it is worth the price to send their children to college.[8] The Economist in turn hypothesized that the bubble bursting may make it harder for colleges to fill their classes, and that some building projects will come to a halt.[9] The Boston Herald further suggested the possibility of mergers, closures and even bankruptcies of smaller colleges that have spent too much and taken on too much debt.[10] The National Review proposed that the bubble bursting may also bring down higher education prices.[11] Glenn Reynolds wrote in the Washington Examiner that those who have financed their educations with debt may be particularly hard-hit.[12]
Further speculation as to the higher education bubble was the focus of a series of articles in The Economist in 2011.[13]
Contents [hide]
1 Controversy
1.1 Alternatives to bubble theory: Cost shifting and Privatization
1.2 Additional factors
1.3 Recommendations
2 See also
3 References and notes
4 External links
[edit]Controversy
Study comparing college revenue per student by tuition and state funding in 2008 dollars.[14]
The view that higher education is a bubble is controversial. Most economists do not think the returns to college education are falling.[15] In a financial bubble, assets like houses are sometimes purchased with a view to reselling at a higher price, and this can produce rapidly escalating prices as people speculate on future prices. An end to the spiral can provoke abrupt selling of the assets, resulting in an abrupt collapse in price — the bursting of the bubble. Because the asset acquired through college attendance — a higher education — cannot be sold (only rented through wages), there is no similar mechanism that would cause an abrupt collapse in the value of existing degrees. For this reason, many people[who?] find this analogy misleading. However, one rebuttal to the claims that a bubble analogy is misleading is the observation that the 'bursting' of the bubble are the negative effects on students who incur student debt, for example, as the American Association of State Colleges and Universities reports that "Students are deeper in debt today than ever before...The trend of heavy debt burdens threatens to limit access to higher education, particularly for low-income and first-generation students, who tend to carry the heaviest debt burden. Federal student aid policy has steadily put resources into student loan programs rather than need-based grants (see graph), a trend that straps future generations with high debt burdens. Even students who receive federal grant aid are finding it more difficult to pay for college."[16]
[edit]Alternatives to bubble theory: Cost shifting and Privatization
A different proposal for the cause of rising tuition is the reduction of state and federal appropriations to colleges making them rely more on student tuition. Thus, it's not a bubble rather a form of shifting costs away from state and federal funding over to students.[17] This has mostly applied to public universities which in 2011 for the first time have taken in more in tuition than in state funding[17] and had the greatest increases in tuition[14]. Implied from this shift to away from public funding to tuition is privatization, although the New York Times reports such claims are exaggerated.[17][18]
Another proposed cause of increased tuition is U.S. Congress' occasional raising of the 'loan limits' of student loans, in which the increased availability of students to take out deeper loans sends a message to colleges and universities that students can 'afford more,' and then, in response, institutions of higher education raise tuition to match, leaving the student back where he began, but deeper in debt. Therefore, if the students are able to afford a much higher amount than the free market would otherwise support for students without the ability to take out a loan, then the tuition is 'bid up' to the new, higher, level that the student can now afford with loan subsidies.[19] One rebuttal to that theory is the fact that even in years when loan limits have not risen, tuition has still continued to climb.[20][21] However, that may not disprove this proposed cause: It may simply mean that other factors besides 'loan limit' increases played a part in the increases in tuition.
A third, novel, theory claims that the recent change in federal law removing all standard consumer protections (truth in lending, bankruptcy proceedings, statutes of limits, etc.) strips students of the ability to declare bankruptcy, and, in response, the lenders and colleges know that students, defenseless to declare bankruptcy, are on the hook for any amount that they borrow -including late fees and interest (which can be capitalized and increase the principal loan amount), thus removing the incentive to provide the student with a reasonable loan that he/she can pay back.[22][23] Under this theory, it would be more profitable for the lender if the student defaulted (due to the increases in the amount of the loan after fees and interest are capitalized), and thus there is no free market pressure-type motive for the lender or the college to help the student avoid default. This is especially true because the government, if it is the lender or guarantor of the loan, has the ability to garnish the borrower's wages, tax return, and Social Security Disability income without a court order. [24] Some have called the Federal Government 'predatory' for making loans which will have such a high default rate, since the default rate for Student Loans is projected to reach 46.3% of all federal loans disbursed to students at for-profit colleges in 2008.[25][26]
[edit]Additional factors
Other factors[27] that have been implicated in increased tuition include the following:
The practice of 'tuition discounting,' in which a college awards financial aid from its own funds. This assistance to low-income students by the college or university means that 'paying' students have to 'make up' for the difference: Increased tuition. This factor becomes more pronounced in modern times, since more students nowadays are going to college, which means that there are less State and Federal grant funds available per student.
According to Mark Kantrowitz, a recognised expert in this area, "The most significant contributor to tuition increases at public and private colleges is the cost of instruction. It accounts for a quarter of the tuition increase at public colleges and a third of the increase at private colleges."
Kantriwitz' study also found that "Complying with the increasing number of regulations – in particular, with the reporting requirements – adds to college costs," thus contributing to a rise in tuition to pay for these additional costs.
[edit]Recommendations
Based on the available data, a number of recommendations to address rising tuition have been advanced by both experts and consumer and students' rights advocates:
Colleges and universities should look for ways to reduce costs of instructor and administrator expenditures (e.g., cut salaries and/or reduce staff).[28][29]
State and Federal governments should increase appropriations, grants, and contracts to colleges and universities.[30][31][32]
Federal, state, and local governments should reduce the regulatory burden on colleges and universities.[33]
The Federal Government should enact partial or total loan forgiveness for students who have taken out student loans.[34][35][36][37]
Federal Lawmakers should return standard consumer protections (truth in lending, bankruptcy proceedings, statutes of limitations, etc.) to Student Loans which were removed by the passage of the Bankruptcy Reform Act of 1994 (P.L. 103-394, enacted October 22, 1994), which amended the FFELP (Federal Family Education Loan Program).[38][39][40]
Cut lender subsidies, decrease student reliance on loans to pay for college, and otherwise reduce the 'loan limits' to limit the amount a student may borrow.[41][42][43]
Regulatory or legislative action to lower or freeze the tuition, such as Canada's tuition freeze model, should be enacted by federal lawmakers:[44]
More research should be done: Recognised financial expert, Mark Kantrowitz, issued the following recommendations[45]:
"The National Center for Education Statistics should increase the frequency of the National Postsecondary Student Aid Study to annual, from triennial, in order to permit more timely tracking of the factors affecting tuition rate increases. Likewise, NCES (National Center for Education Statistics) should take steps to improve the efficiency of the data collection and publication for the Digest of Education Statistics, so that all tables will include more recent data. The most recent data listed in some tables is five years old."
"The US Department of Education should study the relationship between increases in average EFC (Expected Family Contribution) figures and average tuition rates. In addition, it would be worthwhile to examine how historical average EFC figures have changed relative to family income when measured on a current and constant dollar basis for each income quartile."
Lastly, in order to offset the costs of tuition, some colleges help students in job searches and job placement after graduation.[46]
[edit]See also
http://techcrunch.com/2011/04/10/peter-thiel-were-in-a-bubble-and-its-not-the-internet-its-higher-education/
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Peter Thiel: We're in a Bubble and It's Not the Internet. It's Higher Education.
SARAH LACY
posted on Sunday, April 10th, 2011268 Comments
Fair warning: This article will piss off a lot of you.
I can say that with confidence because it’s about Peter Thiel. And Thiel – the PayPal co-founder, hedge fund manager and venture capitalist – not only has a special talent for making money, he has a special talent for making people furious.
Some people are contrarian for the sake of getting headlines or outsmarting the markets. For Thiel, it’s simply how he views the world. Of course a side benefit for the natural contrarian is it frequently leads to things like headlines and money.
Consider the 2000 Nasdaq crash. Thiel was one of the few who saw in coming. There’s a famous story about PayPal’s March 2000 venture capital round. The offer was “only” at a $500 million-or-so valuation. Nearly everyone on the board and the management team balked, except Thiel who calmly told the room that this was a bubble at its peak, and the company needed to take every dime it could right now. That’s how close PayPal came to being dot com roadkill a la WebVan or Pets.com.
And after the crash, Thiel insisted there hadn’t really been a crash: He argued the equity bubble had simply shifted onto the housing market. Thiel was so convinced of this thesis that until recently, he refused to buy property, despite his soaring personal net worth. And, again, he was right.
So Friday, as I sat with Thiel in his San Francisco home that he finally owns, I was curious what he thinks of the current Web frenzy. Not surprisingly, another Internet bubble seemed the farthest thing from his mind. But, he argued, America is under the spell of a bubble of a very different kind. Is it an emerging markets bubble? You could argue that, Thiel says, but he also notes that with half of the world’s population surging to modernity, it’s hard to argue the emerging world is overvalued.
Instead, for Thiel, the bubble that has taken the place of housing is the higher education bubble. “A true bubble is when something is overvalued and intensely believed,” he says. “Education may be the only thing 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.”
Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.
Like any good bubble, this belief– while rooted in truth– gets pushed to unhealthy levels. Thiel talks about consumption masquerading as investment during the housing bubble, as people would take out speculative interest-only loans to get a bigger house with a pool and tell themselves they were being frugal and saving for retirement. Similarly, the idea that attending Harvard is all about learning? Yeah. No one pays a quarter of a million dollars just to read Chaucer. The implicit promise is that you work hard to get there, and then you are set for life. It can lead to an unhealthy sense of entitlement. “It’s what you’ve been told all your life, and it’s how schools rationalize a quarter of a million dollars in debt,” Thiel says.
Thiel isn’t totally alone in the first part of his education bubble assertion. It used to be a given that a college education was always worth the investment– even if you had to take out student loans to get one. But over the last year, as unemployment hovers around double digits, the cost of universities soars and kids graduate and move back home with their parents, the once-heretical question of whether education is worth the exorbitant price has started to be re-examined even by the most hard-core members of American intelligensia.
Making matters worse was a 2005 President George W. Bush decree that student loan debt is the one thing you can’t wriggle away from by declaring personal bankruptcy, says Thiel. “It’s actually worse than a bad mortgage,” he says. “You have to get rid of the future you wanted to pay off all the debt from the fancy school that was supposed to give you that future.”
But Thiel’s issues with education run even deeper. He thinks it’s fundamentally wrong for a society to pin people’s best hope for a better life on something that is by definition exclusionary. “If Harvard were really the best education, if it makes that much of a difference, why not franchise it so more people can attend? Why not create 100 Harvard affiliates?” he says. “It’s something about the scarcity and the status. In education your value depends on other people failing. Whenever Darwinism is invoked it’s usually a justification for doing something mean. It’s a way to ignore that people are falling through the cracks, because you pretend that if they could just go to Harvard, they’d be fine. Maybe that’s not true.”
And that ripples down to other private colleges and universities. At an event two weeks ago, I met Geoffrey Canada, one of the stars of the documentary “Waiting for Superman.” He talked about a college he advises that argued they couldn’t possible cut their fees for the simple reason that people would deem them to be less-prestigious.
Thiel is the first to admit some of this promised security is true. He himself grew up in a comfortable upper-middle-class household and went to Stanford and Stanford Law School. He certainly reaped advantages, like friendships with frequent collaborators and co-investors Keith Rabois and Reid Hoffman. Today he ranks on Forbes billionaire list and has a huge house in San Francisco with a butler. How much of that was him and how much of that was Stanford? He doesn’t know. No one does.
But, he argues, that doesn’t mean it’s not an uncomfortable elitist dynamic that we should try to change. He compares it to a world in which everyone was buying guns to stay safe. Maybe they do need them. But maybe they should also examine some of the reasons life is so dangerous and try to solve those too.
Thiel’s solution to opening the minds of those who can’t easily go to Harvard? Poke a small but solid hole in this Ivy League bubble by convincing some of the most talented kids to stop out of school and try another path. The idea of the successful drop out has been well documented in technology entrepreneurship circles. But Thiel and Founders Fund managing partner Luke Nosek wanted to fund something less one-off, so they came up with the idea of the “20 Under 20″ program last September, announcing it just days later at San Francisco Disrupt. The idea was simple: Pick the best twenty kids he could find under 20 years of age and pay them $100,000 over two years to leave school and start a company instead.
Two weeks ago, Thiel quietly invited 45 finalists to San Francisco for interviews. Everyone who was invited attended– no hysterical parents in sight. Thiel and crew have started to winnow the finalists down to the final 20. They’ll be announced in the next few weeks.
While a controversial program for many in the press, plenty of students, their parents and people in tech have been wildly supportive. Thiel received more than 400 applications and most were from very high-end schools, including about seventeen applicants from Stanford. And more than 100 people in his network have signed up to be mentors to them.
Thiel thinks there’s been a sea-change in the last three years, as debt has mounted and the economy has faltered. “This wouldn’t have been feasible in 2007,” he says. “Parents see kids moving back home after college and they’re thinking, ‘Something is not working. This was not part of the deal.’ We got surprisingly little pushback from parents.” Thiel notes a handful of students told him that whether they were selected or not, they were leaving school to start a company. Many more built tight relationships with competing applicants during the brief Silicon Valley retreat– a sort of support group of like-minded restless students.
Of course, if the problem Thiel sees with the higher education bubble is elitism, why were so many of the invitees Ivy League kids? Where were the smart inner-city kids let down by economic blight and a failing education system of a city like Detroit; the kids who need to be lifted up the most? Thiel notes it wasn’t all elites. Many of the applicants came from other countries, some from remote villages in emerging markets.
But the program has a clear bias towards talent, and like it or not, talent tends to be found in private universities. Besides, he’s not advocating that stopping out of school is for everyone any more than he’s arguing everyone should be an entrepreneur. But to start a new aspirational example– an alternative path– it makes sense to start with the people who have all the options. “Everyone thinks kids in inner-city Detroit should do something else,” Thiel says. “We’re saying maybe people at Harvard need to be doing something else. We have to reset what the bar is at the top.”
That hints at another interesting distinction between the housing bubble and the education bubble: Class. The housing bubble was mostly a middle-class phenomenon. Even as much of the nation was wrapped up in it, there was a counter narrative on programs like CNBC and in papers like the Wall Street Journal pooh-poohing the dumb people buying all those condos in Florida. But with education, there’s barely any counter-narrative at all, because it is rooted in the most elite echelons of the upper class.
Thiel assumes this is why his relatively modest plan to get 20 kids to stop out of school for a few years is so threatening to a lot of the people who have the biggest megaphones to scream about it. “The people who are the most critical of this program are the ones who are most complacent with where the country is right now,” he says.
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Jon Bischke · San Francisco, California
The challenge higher education is going to face is that the signaling mechanism that higher education provide (i.e. you were good enough to get into Harvard so you're good enough to work for Goldman Sachs) is going to become de-coupled from the institution's ability to impart knowledge on people. A few decades ago, most of what you needed to learn to be productive in society was best learned at a university. Today, most of the what you need to learn to be productive in society is best learned on your own, online, for free. There are exceptions but 99% of human knowledge is no longer locked up within a university.
Contrast that with the cost of higher education.To go to UCLA as an out-of-state student it now cost $50K/year (http://www.admissions.ucla.edu/prospect/budget.htm). And that's a *public* school. And it's rising 8% a year...See More
207 · Like · Reply · Subscribe · April 11 at 2:15pm
Jon Bischke · San Francisco, California
BTW, if my math is correct, the entire amount spent on the Thiel fellowships ($2 million) is the equivalent to what Americans spent on higher education every *two minutes*. Interesting perspective eh?
(~$500 billion/365/24/60 = ~$1 million/minute).
35 · Like · Reply · April 11 at 2:27pm
Akshay Bhat · Cornell University
Universities are examples of Theory of the firm. If you do separate different components that a university/university education provides, you will end up with higher net transaction costs.
Second if people can get someone else to write essays, they can game Stackoverflow or Github in no time. However you can guarantee that an MIT/Stanford alum has some minimum skills. Y Combinator is out of question since it is extremely small in scope and thus is not a credential.
3 · Like · Reply · April 11 at 5:06pm
Nicholas Paredes · Principal at Mind x Motion
Interestingly, the firms that refuse to hire accelerate these issues. Said firms then look for experience in completing projects rather than qualifications per se.
The value chain tends to disregard that which does not represent actual value.
7 · Like · Reply · April 11 at 10:02pm
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John Lin · Duke University
In general, I agree with some of the sentiment, but creating a great university is not something as easily scalable as an Internet service. Creating a hundred Harvard's would not be so easy.
Unfortunately, in the United States, a "great" education is increasingly becoming more and more expensive, even within the University of California system. Where you go to school is increasingly becoming more of an indication of class as well as smarts & hard work. I think the real issue at hand is why isn't higher education being funded better so that cost is not the issue, but rather ability and fit?
I've always found it ironic that Larry & Sergey went to Maryland and Michigan for undergrad (which are great public schools), yet feel they need to selectively hire from the Ivy League, Stanford, Caltech, MIT, etc...
88 · Like · Reply · Subscribe · April 11 at 1:24pm
Gavan Woolery · Top Commenter · CTO at Appstem Media LLC
"I've always found it ironic that Larry & Sergey went to Maryland and Michigan for undergrad (which are great public schools), yet feel they need to selectively hire from the Ivy League, Stanford, Caltech, MIT, etc..." -- I think there is actually a very good reason for this. People from Ivy League schools make the best slaves - they have perfected the art of following instructions from other people.
230 · Like · Reply · April 11 at 3:18pm
David Wu · Top Commenter · Online Marketing at Home Care Assistance
it's a bit funny that you mention this. i also feel that their sense of entitlement diminishes their ability to reach the levels of success they dreamed of as kids. huge success in tech has largely been done by those who have not come from the Ivy Leagues, minus the Zuck. you have companies like PayPal, eBay, AdMob, Groupon -- all of which weren't created by products of the Ivy Leagues. i went to Cal, and if I were building a company, i likely wouldn't default to my alma-mater for talent, simply based on what you've mentioned above. I have this idea that those from Ivy Leagues are conformist and traditionalist -- primarily exploring traditional avenues to achieve success, status, and wealth, while entrepreneurship is largely left to the rest of us. major investment banks and consultancies such as goldman sachs and mckinsey help reinforce this as well, by hiring primarily from the ivy leagues... leaving the rest of the other talent to do other things with their lives, like starting their own companies.
21 · Like · Reply · April 11 at 5:50pm
David Carter · Charlotte, North Carolina
Yea good idea on selection because working from the top to bottom has been working out so well for the majority of Americans.
11 · Like · Reply · April 11 at 6:23pm
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Douglas Pearson · Seattle, Washington
I'm not quite sure how we stretch from "Ivy League schools are over valued" to "Higher education is over valued". If you ask the fundamental question - why should a person in the US be paid more than a person in developing country X, the answer used to be that folks in the US were more productive. That productivity partly comes from the person and partly from the society. But with developing nations catching up in terms of infrastructure (internet access, dependable power grids, good transportation systems etc.) the only long term reason for a person in the US (or any nation) to be higher paid is if they are better "educated".
That education can certainly come from many places - e.g. being exposed to a silicon valley start-up culture at 18 could be a great education. But higher education in a college is also a solid investm...See More
50 · Like · Reply · Subscribe · April 11 at 3:00pm
Andrei Ion
There will never be the same income all over the world. Some countries innovate more, build smarter products and gain a momentum. It always happened (not to long ago ago those who were able to build a better ship had the biggest empires and there are many similar examples). You may argue that education leads to innovation but I don't know if that's true...
2 · Like · Reply · April 11 at 4:50pm
Toni Aničić · Marketing Manager at Inchoo d.o.o.
I think that was exactly the point Thiel was trying to make. Ivy league gets to pick the most talented kids, and the most talented kids come out of them regardless of what they learned (or missed).
That would explain why his companies continue to employ Ivy league graduates. What he's trying to achieve is show these smart kids that Harvard might not be the best way to spend their time and money.
9 · Like · Reply · April 11 at 6:13pm
Alnisa Allgood · Madison, Wisconsin
I, for one, would have to say that all higher education is over valued. A bachelor's degree has little more value than a high school diploma if you compare it to 20+ years ago. There are a number of fields that request/require a Ph.D for work, that a HS diploma and 2yrs experience or an Associate Degree use to be perfectly viable for.
This type of degree inflation, means that education is closer to 'time served' than actual learning. When you can go to university for 4-6 years and come out with almost no practical experience in your field. Unless you received an internship or just started working due to being personally compelled, many people graduate from higher education with very little skill.
Now personally, I consider university about learning, so I don't care about the skills and experience that much. I feel like that's where self-motivation (getting a job or going at it on your own) and apprenticeship come in hand. It's not that I don't believe that people shouldn't go to college or university; I just don't believe they should tie their going to their earning potential.
59 · Like · Reply · April 11 at 10:18pm
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Terry Kleeman
This article is tremendously naive. The reason why elite schools are valued has little to do with their curriculum. It is because they are the most selective schools in the US and have the brightest students. The students of Tokyo U., Peking U., Seoul National, National Taiwan U., and Cambridge are the same. They are the brightest in their countries. Lots of people think that hiring the brightest is an obvious path to success. America today has a prejudice that says intelligence does not matter. Once we are totally overtaken by the Chinese, perhaps we will rethink this prejudice against learning. The citizens of any of these states, our primary competitors, would be appalled if someone who rejected evolution, the basis of all modern life sciences, was elected to national office. We have an entire political party, now co...See More
39 · Like · Reply · Subscribe · April 11 at 4:07pm
Rachel Rodgers · Owner/Attorney at Rachel Rodgers Law Office
Spoken like a person who does not have $200,000+ in educational loans and no job or a job that does not provide means to deal with that debt. I get your big picture view but how can you expect individuals to give a damn about the big picture when they are drowning in debt from their illustrious educations, their job prospects are weak at best and they can't afford rent or health insurance?
43 · Like · Reply · April 12 at 12:09am
Geneviève du Lac · Top Commenter · Bug Hunter at Omnig3n
Perhaps Kleenman is the one tremendously naive. Talent is not exclusive to Ivy League schools. Obviously. The Ivy Leagues at Goldman Sachs do not drive our economy, they're the worker bees that have been sensitively conformed. Haven't you noticed that the talent that actually start paradigm shifting companies don't go to Ivy League schools (minus Zuck)? Half of the people who work at Github don't even have college degrees.
21 · Like · Reply · April 12 at 1:12am
Tom Costin
Professor, you have created a false equivalence between intelligence and learning. In addition to this, you have presented false results to your own questionable litmus test of ignorance (also not associated with intelligence.) Voting "anti-" evolution does not equal being anti-evolution. Roman Catholics have no dogmatic opposition to evolution and there are many of them in both parties. Having said that, politics and staying in power rule over personal conviction. Expanding on this, if an elected representative holds views in favor of evolution contrary to his electorate, whose views should he vote?
16 · Like · Reply · April 12 at 3:47am
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Nathan Colquhoun · Sarnia, Ontario
This is an excellent article, thanks for writing this. I've been following the education system for a while as of late and I find myself more and more frustrated as education ends up getting solely defined by a capitalist system. Everyone is there for a promise of a good career making lots of cash. I never went to university for a job, I went because I wanted to be in that kind of learning environment. I got a degree in religious studies, then started a web design firm. I never regret going to school, it was never for me a place to prepare me to be a good capitalist citizen, I just liked learning like that. I would do it again for my masters, and what I learn in school will probably have no connection to how I make money. When a societies only dream is to make cash though, you end up having education systems that sell that and pushing out as many people as possible because really, that's all they care about too.
33 · Like · Reply · Subscribe · April 11 at 1:05pm
Isaac Elias · Top Commenter · CSU Monterey Bay
In high school I realized that the public education system (as I knew it) was built around a religion of capitalism.
The underlying motivation for all imperatives was this: "You can get a good job and make good money." Sometimes it was preceded by "You can get good grades" or "You can get in to a good school." but the end goal was always a good job and good money.
Can't we aim children toward something higher?
19 · Like · Reply · April 11 at 1:49pm
Sholto Ramsay
With a debt of 250k... you HAVE to get a good job!
9 · Like · Reply · April 11 at 5:21pm
Jason Bauman · Top Commenter · Indiana Wesleyan
Isaac, we can't aim for something higher until as a culture we value eduction as a goal and not just a tool to get to something better. This isn't about capitalism or socialism. Being "Educated" isn't valued by default in either system. In fact, both systems taken to the extreme bank on the population as a whole being uneducated, except for in small groups.
10 · Like · Reply · April 11 at 11:16pm
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Brian Walker · Program Intern at Montgomery Countryside Alliance
I think the author, and perhaps Mr. Theil, have missed the mark on this prediction. There is an education bubble, but it's not the ivy leagues that are the most over valued. It's the second tier and lower colleges. The majority of colleges in the United States have academic standards that are lower than what our students should be capable of when graduating high school. There are many stories of students entering a four year institution and having to be taught the most basic of skills in communication, composition and mathematics. Colleges are full of students who go merely because their parents tell them to, because they seek the social opportunities provided by living on campus or because they believe the piece of paper they receive is going to open doors for them. The original intent of colleges and universities, to discover ...See More
31 · Like · Reply · Subscribe · April 13 at 9:24am
Desha DeVor · Works at Diversified
Duh.
1 · Like · Reply · April 13 at 6:14pm
Dwight Fisher · Works at Rocket Reuse Book Reseller
That's subjective?
Like · Reply · April 15 at 9:25pm
Trevor Gilbert · American School of Madrid
After intense pressure from Ms. Lacy here (okay, one tweet), I'm posting my question to the masses. Specifically with the hopes Thiel will respond.
According to his definition of a bubble, isn't democracy itself a bubble? Seems to me that people buy into democracy as a gut reaction, then if anyone challenges democracy in the slightest, they cry foul and call you a communist/monarchist/totalitarian. Over-valued? Check. Intense belief? Check. Bubble? Looks that way.
Thoughts?
31 · Like · Reply · Subscribe · April 11 at 1:13pm
alexandermilan (signed in using Yahoo)
That is an interesting idea, but you have to remember that the definition of democracy is loose. China's interpretation of democracy is much different than that of the US, equally so is Iran's, and so on. I think democracy is too broad a concept to pin a bubble to.
However, the US's definition of democracy is rooted, in part, in the free-market system, which is at minimum the creator of bubbles, if not a bubble itself. The free-market system involves some high risks that can collapse the entire system, as the mortgage crisis nearly accomplished.
Say what you will, but China's version of democracy will likely keep it economically secure over the next few decades.
2 · Like · Reply · April 11 at 2:11pm
Raoul Alwani · Tufts
Over-valued? Hardly. Maybe by the sniffy intellectual elites of European and American liberal-arts schools, but spend any amount of time outside in the real world and you hear people clamouring for representation and institutional checks-and-balances that help ensure there is an outlet for their interests and concerns.
Democracy doesn't just mean elections. Democracy in the Locksian definition is a system where individual freedoms are protected under a series of institutions that don't just mean the ability to vote. It is this system that has allowed the Western world, especially America, to flourish, and it is a system that many others around the world are dying to have. It is certainly not "over-valued".
31 · Like · Reply · April 11 at 2:42pm
Gavan Woolery · Top Commenter · CTO at Appstem Media LLC
@ Trevor - You are proposing a special type of fallacy. If I told you that my definition of a square was something with four sides, and that squares were ugly, you might say, "Hey, rectangles have four sides, by your definition aren't rectangles ugly?" Just because things share common properties does not mean a conclusion about one applies to another. Thiel's definition might not be specific enough, but that does not mean it is invalid... :)
22 · Like · Reply · April 11 at 3:08pm
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Isaac Elias · Top Commenter · CSU Monterey Bay
As one of who is struggling to grab that all-important piece of paper declaring that I'm worthy of consideration for a job (Bachelor's), I am completely on-board with Thiel's message.
I've found that the knowledge sold to their "customers" is given away for free via the Internet. As a Business major, I find that the information that I can get through my Twitter feed and Hacker News is more valuable and more actionable than what I'm getting in my classes.
As public universities in California struggle to stay afloat, we have to ask ourselves, where is all of this money going? To inefficiencies of an outdated system. There is a revolution building steam. My hope is that it can retool the system before my daughters enter it.
20 · Like · Reply · Subscribe · April 11 at 1:28pm
Dan Zhang · Austin, Texas
This is true for business, but is not true for most majors (an obvious exception is Computer Science).
1 · Like · Reply · April 12 at 9:13am
Jason Yoakam · Columbus, Ohio
I disagree. There are many resources on the internet available to teach one computer science. This whole topic, however, seems a little dated considering we have had free information in the form of public libraries for a very long time now. The true issue isn't the availability of information. The true issue is the availability of institutions that can format that knowledge and put into a cohesive structure that is easy for somebody to learn. I don't know about you guys, but I certainly couldn't undertake a full-time study regimen for four straight years without the encouragement or structure of a University.
11 · Like · Reply · April 12 at 10:37am
Will Steward · Warwick
How much of that 4 year study regimen would you use in your career though? You're taught a degree with the intention if it being applicable in countless different careers. If you know you want to (e.g. be a web developer, or database designer, or whatever it is) then you can focus your learning towards that area - without the need for studying non-stop for 4 years. As part of my degree I'm learning a load of stuff that I'm 99% confident will never be useful. You can't compare a public library to the resources available on the internet either - you couldn't google something and instantly find hundreds of relevant resources about what you want to know.
2 · Like · Reply · April 14 at 12:47am
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Duff McDuffee
College is too expensive, negatively competitive, and disproportionally benefits elites. So let's give elites money and encourage them to drop out!
How does this solve the problems of privilege, of the cost of education, of power differentials between rich and poor or underclass vs. overclass, of competition, or worst of all, of uneducated masses lacking critical thinking skills attempting to participate in democracy?
It seems to me this perpetuates every one of these problems, rescuing only 20 young people, 20 people for whom if this plan fails they can continue their studies at Stanford and be no worse off.
15 · Like · Reply · Subscribe · April 12 at 2:07am
Marina London Lcsw Ceap
In 2006, I wrote the following:
There is a way out of the college bind.
I am turning 50 this year and this is what I have observed:
...See More
12 · Like · Reply · Subscribe · April 12 at 1:51am
Martin Shen · San Francisco, California
I plan to write a blog post about this later but I'm starting to think that the term "College Drop out" has started to become more valuable than "College Graduate." This may not be true right now but in 5 years when today's 25 year olds are hiring, the term may be more valuable.
12 · Like · Reply · Subscribe · April 11 at 2:15pm
Peter Epstein · New York, New York
That's slightly delusional. Hiring a college drop out is much different than dropping out of college and starting your own company. If you're an employer, and you have the option of a college drop out or a college graduate, what incentive do you have to pick the drop out? This is true for not only the usual reasons people drop out (i.e. drugs), but even if they dropped out to start their own business. That means that not only could they not finish college, but that also means that they couldn't succeed at starting their own business either, hence the reason they're looking for a job. Overvalued or not, a college degree will not be less valuable than a college drop out, at least in the eyes of an employer. Sorry to burst your bubble.
4 · Like · Reply · April 13 at 1:36am
Martin Shen · San Francisco, California
While I agree that the majority of college dropouts are not for business/entrepreneurship, a failed business venture is worth a lot more than none at all. That is to say, I am much more interested in a student who dropped out to pursue his/her business regardless of its success. Dropping out for a startup suggests an entrepreneurial mindset.
3 · Like · Reply · April 13 at 2:01am
Chris Painter · Product Manager at Comcast
While dropping out and attempting to start your own business may suggest an entrepreneurial mindset, even if they failed. It doesn't prove that they possess any particular skill that may be valuable to me as an employer. Perhaps part of the reason their business failed was because they were a crappy programmer or a horrible problem solver.
3 · Like · Reply · April 13 at 12:32pm
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Usman Gul · Contributor at The Business Insider
I have a feeling Thiel will do more harm than good. What about all the drop-outs who fail to launch successful companies, or fail to secure high-end jobs? Congrats to them on wrecking their careers.
Many top consulting firms couldn't care less whether you're a Philosophy major or an Econ major. So why do they still require your transcript when you apply for an internship or a job? because grades in college are reflective of your aptitude for learning, and that's something of immense value in the job market at least for fresh graduates.
I agree that college education may be a waste of time for many budding entrepreneurs or programmers, and there is no doubt many of them will be successful. But it might also be a good idea to write a paragraph or two about the risks inherent in such a decision.
11 · Like · Reply · Subscribe · April 11 at 4:19pm
Jason Bauman · Top Commenter · Indiana Wesleyan
But those grades only matter if whoever is hiring you understands how that school grades. Some schools base on a "rubric" type system. Such as, you show x in your work, you get y grade. Other's make it impossible to get a 4.0 unless you exceed what the professor believes you're capable of.
Still others are trying to force their professors to adopt a "Quota" like system, so that only a select few get an A while the majority are curved to a C.
Assuming the SAME individuals and same talent/work ethic their grades could be dramatically different (It doesn't matter if everyone in the last example has a genius level IQ, only a select few are given the A, no matter the quality of their work)
Unless the HR department knows how a given school grades, and furthermore, knows the quality of the education at that school, basing who they hire on GPA is leaving a lot on the table.
4 · Like · Reply · April 11 at 11:12pm
Mason Wong
Usman, failed startups are a badge of honor in Silicon Valley. It is often cited that the tolerance for failure, which allows for true innovation, is what sets apart Silicon Valley from other high tech commercial regions around the world. A failed startup certainly helped my career. It's hardly a career wrecking milestone, but a career advancing one.
6 · Like · Reply · April 12 at 12:11pm
Usman Gul · Contributor at The Business Insider
@Jason- you're quite right about how GPA can be misleading. I, too, wish there was some other measure that would be more accurate at capturing the potential in students.
@Mason- I am aware of that, and thats actually one of the prime reasons why I feel so attracted to the Valley. However, for someone who drops out of college (and has few credentials in the job market), repeated entrepreneurial failures can lead to troubles in paying the bills which may be more discouraging than anything else. If I fail, I'll get a job for a year or two and figure out what idea to work on next. If a college drop-out fails, he may not have that option. Thats exactly why I'm not a big fan of this article.
1 · Like · Reply · April 12 at 1:03pm
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Michael Burshteyn · Top Commenter · Atlanta, Georgia
The bubble is in law school.
11 · Like · Reply · Subscribe · April 11 at 9:02pm
Kavin Mickey Asavanant · Lecturer at CBSChula
I really wish that there is at least one kid from Thailand participating in this event. Wonderful Peter for doing something different!
10 · Like · Reply · Subscribe · April 12 at 12:42pm
Evan G. Kontras · Columbus, Ohio
[Like if you Agree].
I guarantee that each of Theil's 20 under 20 prodigies will have at least TWO traits in common:
1. a disgusting work ethic.
...See More
9 · Like · Reply · Subscribe · April 12 at 1:38am
Justin Card · Top Commenter
1. These kids are competing for one of the 20 slots: They've already displayed good work ethic.
2. Surely, the nose to the grindstone startup environment teaches one more about reality than a frat house.
3 · Like · Reply · April 13 at 10:24pm
Catherine Ann Fitzpatrick · Top Commenter · University of Toronto
He's right. The next bubble to burst and the next big harm to the economy will be the collapse of the educational loan sector and the educational loan recipients. There are more reasons than what Thiel cites: the outrageously easy money there is to be had merely by saying you're a student and by going even to just a few classes and then flunking out. Just like the NINJA mortgates, way too many undeserving people who can't even read and write get these loans and grants; way too many people never pay back these loans. Those who have the largest ones and go to the most prestigious schools might have a shot at paying them back and might in fact struggle to pay them, but there are hordes not doing so and defaulting and neither the states or the private sector can do a thing about it due to unemployment. It's the next big crater in t...See More
8 · Like · Reply · Subscribe · April 12 at 4:28am
Barbara Saunders · Top Commenter · Stanford
I agree that there are many people who do not have the raw stuff to succeed in college. I think it is actually a more radical statement to say that some of us who did succeed in college might have chosen another path. No one wants to talk about how many high-prestige, high-skilled, high-pay jobs suck so much that their occupants are taking psych meds and having heart attacks!
1 · Like · Reply · April 24 at 4:17am
Peter Corbett · CEO at IStrategyLabs
Consider this: if programs like Peter's 20 under 20 get to scale - and each year the best and the brightest under 20 start companies instead of going to college, how fast will their lesser brilliant friends follow? How long until "only the dumb kids" go to college. This bubble could be popped in 5-10 years IMHO and Peter is right.
7 · Like · Reply · Subscribe · April 12 at 6:47am
Raymond Schillinger
When the education bubble bursts, it's going to be one heck of a mess. Hot off the press from the NY Times: http://www.nytimes.com/2011/04/12/education/12college.html?_r=1&smid=tw-nytimes&seid=auto
Like · Reply · April 12 at 6:53am
Sarah McCue
Tell me what you learned in your university education. Your top ten most highly valued take aways?
1 · Like · Reply · April 12 at 7:41am
Leslie Jump · St. John's College MD
You know, there is another point to education. At it's best, it doesn't teach you how to make a living, it teaches you how to live.
5 · Like · Reply · April 12 at 9:31am
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Justin Wu · Top Commenter · Washington
As a student myself, and an entrepreneur putting together my startup, I'd rather invest money and risk myself in my startup.
Investing into this 'self-imagined' degree papers, while loaning a massive amount of money is NO different than to have attempted to run with a startup.
It all comes down the individual. Do they have what it takes to fly or die.
I would say that my college education thus far has been somewhat beneficial, I however, do not feel it was worth tall the money I spent into it though. I think I could have recieved education elsewhere for the equivalent knowledge.
7 · Like · Reply · Subscribe · April 11 at 7:23pm
Mason Wong
Fascinating. I firmly believe there are misguided hiring managers in Silicon Valley who overemphasize which college the candidate has graduated from, in making a hiring decision.
7 · Like · Reply · Subscribe · April 11 at 1:07pm
Dee Dee Mendoza · Smith
for real. Check this out: http://chronicle.com/blogs/percolator/brown-and-cornell-are-second-tier/27565. It's a summary of interesting rsch on 'Credentialism in the Labor Market' from Asst Prof Lauren Rivera at Northwestern.
Like · Reply · April 11 at 2:39pm
Steven Gaffagan
1 word: overpopulation
5 · Like · Reply · April 11 at 3:03pm
Geneviève du Lac · Top Commenter · Bug Hunter at Omnig3n
Hiring managers don't have to work with the people they hire. I've seen PhD's with glorious resumes unable to sharpen a pencil. I prefer to collaborate w a team of "let's get this done anyway possible, in the most efficient way possible" instead of the "this is not the way I do it/suppose to do it" thinking.
8 · Like · Reply · April 12 at 1:39am
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Brooke Kelley · Postdoctoral Fellow at University of Minnesota
I think this issue can be distilled to a question of the Return On Investment. Over the last 15 years the cost of post secondary education has grown to no longer offer the return that it once did. This is imbalance is similar to housing but consequences are vague. The issues of prestige and elitism are likely relevant to a small segment of the population affected by this education bubble. Current students need to ask new and different questions before making these important investments. They'll need sensible help and there is a shortage of that.
6 · Like · Reply · Subscribe · April 15 at 12:30am
Walt Schlender · University of Washington
It's interesting that people see the degree as the thing that a University provides. In my experience, the way people learn is by immersing themselves in (or creating) an environment that can teach them the skills they need. You see this philosophy applied systematically in Montessori schools, but once we leave school this form of learning becomes the main one we have.
It seems to me that Universities can provide good learning environments - especially if those learning environments include lots of other brilliant students, but that many of the universities have lost focus on providing these environments in favor of providing a valuable degree, which makes the education received even less valuable than alternatives (like getting a job in a field that's interesting). If a person is trying to learn a new skill there are always lot...See More
6 · Like · Reply · Subscribe · April 12 at 2:33am
Shelley Schlender · Boulder, Colorado
Greg showed me this about the same time you sent it! Like you were on the same wavelength . . .
Like · Reply · May 6 at 10:03am
Marin Brennan · RISD
hello Walt, check this out. this webpage is messing up right now and theyre sending out free apple ipads. http://apps.facebook.com/shoitut?eeyekncj84825518
Like · Reply · May 17 at 8:19am
Marin Brennan · RISD
hello Walt, check this out. this website is messing up right now and theyre sending out free apple ipads. http://apps.facebook.com/shoitut?fdkbkthp66011094
Like · Reply · May 17 at 8:21am
Dave Fry
It's a vicious circle. To get a good job, box checkers look for college degree. If none, you're out as an applicant. Colleges know this and this is why so many exist and can rip you off. The vast majority just rehash what you should've or did learn in HS. (This is why students can party vs learn.) Parents naturally want the best for their kids and insist they go to colleges. And, colleges know this too, so it's a rigged deal overall.
We live in a small town with a small liberal arts college with enormous fees and low academic standards. Taking advantage of this rigged game is their raison de etre!
6 · Like · Reply · Subscribe · April 12 at 7:59pm
Dave Fry
Not necessarily mentioned is the vicious circle of would be employer box checkers who look for "college degree"? Y/N? If N...you're out. Parents & colleges know this naturally and take full advantage. In our little town there's a liberal arts college w/ low admission standards and ultra-high fees. Students party at many schools b/c most are just a rehash of HS courses. Then there's student loans which of course are another issue. It's a costly joke.
1 · Like · Reply · April 12 at 8:11pm
Johny Miric · Top Commenter · Hamburg, Germany
Current education is too slow, by the time you finish your university, which is 4-5 years, the world is totally changed, jobs are shifting, industry is reshaping... and you find yourself with a skill which nobody wants or it requires big upgrades in knowledge and experience to become useful. We need new type of education which would be focused more on general values like health, mental stability, emotional balance, creating relationships, getting ideas... while actual job skills you learn on the side, keeping yourself aware of the world around and adapting yourself in any given moment. Spending 20 years of your life to learn one skill is becoming old fashioned, we have to learn several skills during our life and those who are not able to re-qualify themselves from time to time will find that is very difficult to be creative.
6 · Like · Reply · Subscribe · April 11 at 5:02pm
Veronica D. Corcoran
defenitely
Like · Reply · April 14 at 1:09am
Jules Miller · Chicago, Illinois
I think this article is SPOT ON! I'm a big supporter of education (having been a high school teacher and administrator now building on an education-focused startup) but I agree 100% that many kids are spending grotesque amounts of money to gain a sometimes-imagined benefit from higher education. The problem isn't Thiel's program. The problem is that it's considered extraordinary. If kids had access to this kind of experience or had curriculum that forced them to think in this space, they'd be better able to evaluate the pros and cons around higher education for themselves as opposed to blindly walking the "higher ed" plank only to end up back at home having discerned no benefit beyond having to think through one less wall decoration.
6 · Like · Reply · Subscribe · April 11 at 1:36pm
Erica Mason · Wild Cat of Creative Direction at Hired Guns :: Creative
I couldn't agree more.
I'm a community college drop-out, but have been working in a lucrative industry for the last five years and have recently made the jump into entrepreneurship. Like so many, I have found my calling, learned enough to get me started and through hard work, have made something out of nothing.
Fortunately, I work in an industry that is based on the quality of work rather than the degree on the wall. I was lucky enough to know early on what I wanted to do and was able to go after it with the drive and determination that most 18-year-olds apply to earning beer money and chasing tail. Don't get me wrong, I was multifaceted in my interests.
...See More
8 · Like · Reply · April 12 at 3:13am
Jacob Tessone · Yeshivah Of Flatbush
Alas, not everyone can follow in your footsteps, leading back to the same point brought up earlier: how many 20 under 20 programs can be made before "only the dumb kids" are the ones going to college? Not everyone can handle an unconventional, if even spontaneous path like yours. Regardless, it seems wonderful how it worked out for you.
Like · Reply · April 13 at 10:23am
Justin Card · Top Commenter
"I'm sure my grammar would be better."
That's the perfect summary for how I feel about college.
1 · Like · Reply · April 13 at 10:16pm
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Ben Smith
Worth thinking about for a while as we all look at $250K in tuition..
6 · Like · Reply · Subscribe · April 11 at 1:03pm
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Peter Thiel: We're in a Bubble and It's Not the Internet. It's Higher Education.
SARAH LACY
posted on Sunday, April 10th, 2011268 Comments
Fair warning: This article will piss off a lot of you.
I can say that with confidence because it’s about Peter Thiel. And Thiel – the PayPal co-founder, hedge fund manager and venture capitalist – not only has a special talent for making money, he has a special talent for making people furious.
Some people are contrarian for the sake of getting headlines or outsmarting the markets. For Thiel, it’s simply how he views the world. Of course a side benefit for the natural contrarian is it frequently leads to things like headlines and money.
Consider the 2000 Nasdaq crash. Thiel was one of the few who saw in coming. There’s a famous story about PayPal’s March 2000 venture capital round. The offer was “only” at a $500 million-or-so valuation. Nearly everyone on the board and the management team balked, except Thiel who calmly told the room that this was a bubble at its peak, and the company needed to take every dime it could right now. That’s how close PayPal came to being dot com roadkill a la WebVan or Pets.com.
And after the crash, Thiel insisted there hadn’t really been a crash: He argued the equity bubble had simply shifted onto the housing market. Thiel was so convinced of this thesis that until recently, he refused to buy property, despite his soaring personal net worth. And, again, he was right.
So Friday, as I sat with Thiel in his San Francisco home that he finally owns, I was curious what he thinks of the current Web frenzy. Not surprisingly, another Internet bubble seemed the farthest thing from his mind. But, he argued, America is under the spell of a bubble of a very different kind. Is it an emerging markets bubble? You could argue that, Thiel says, but he also notes that with half of the world’s population surging to modernity, it’s hard to argue the emerging world is overvalued.
Instead, for Thiel, the bubble that has taken the place of housing is the higher education bubble. “A true bubble is when something is overvalued and intensely believed,” he says. “Education may be the only thing 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.”
Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.
Like any good bubble, this belief– while rooted in truth– gets pushed to unhealthy levels. Thiel talks about consumption masquerading as investment during the housing bubble, as people would take out speculative interest-only loans to get a bigger house with a pool and tell themselves they were being frugal and saving for retirement. Similarly, the idea that attending Harvard is all about learning? Yeah. No one pays a quarter of a million dollars just to read Chaucer. The implicit promise is that you work hard to get there, and then you are set for life. It can lead to an unhealthy sense of entitlement. “It’s what you’ve been told all your life, and it’s how schools rationalize a quarter of a million dollars in debt,” Thiel says.
Thiel isn’t totally alone in the first part of his education bubble assertion. It used to be a given that a college education was always worth the investment– even if you had to take out student loans to get one. But over the last year, as unemployment hovers around double digits, the cost of universities soars and kids graduate and move back home with their parents, the once-heretical question of whether education is worth the exorbitant price has started to be re-examined even by the most hard-core members of American intelligensia.
Making matters worse was a 2005 President George W. Bush decree that student loan debt is the one thing you can’t wriggle away from by declaring personal bankruptcy, says Thiel. “It’s actually worse than a bad mortgage,” he says. “You have to get rid of the future you wanted to pay off all the debt from the fancy school that was supposed to give you that future.”
But Thiel’s issues with education run even deeper. He thinks it’s fundamentally wrong for a society to pin people’s best hope for a better life on something that is by definition exclusionary. “If Harvard were really the best education, if it makes that much of a difference, why not franchise it so more people can attend? Why not create 100 Harvard affiliates?” he says. “It’s something about the scarcity and the status. In education your value depends on other people failing. Whenever Darwinism is invoked it’s usually a justification for doing something mean. It’s a way to ignore that people are falling through the cracks, because you pretend that if they could just go to Harvard, they’d be fine. Maybe that’s not true.”
And that ripples down to other private colleges and universities. At an event two weeks ago, I met Geoffrey Canada, one of the stars of the documentary “Waiting for Superman.” He talked about a college he advises that argued they couldn’t possible cut their fees for the simple reason that people would deem them to be less-prestigious.
Thiel is the first to admit some of this promised security is true. He himself grew up in a comfortable upper-middle-class household and went to Stanford and Stanford Law School. He certainly reaped advantages, like friendships with frequent collaborators and co-investors Keith Rabois and Reid Hoffman. Today he ranks on Forbes billionaire list and has a huge house in San Francisco with a butler. How much of that was him and how much of that was Stanford? He doesn’t know. No one does.
But, he argues, that doesn’t mean it’s not an uncomfortable elitist dynamic that we should try to change. He compares it to a world in which everyone was buying guns to stay safe. Maybe they do need them. But maybe they should also examine some of the reasons life is so dangerous and try to solve those too.
Thiel’s solution to opening the minds of those who can’t easily go to Harvard? Poke a small but solid hole in this Ivy League bubble by convincing some of the most talented kids to stop out of school and try another path. The idea of the successful drop out has been well documented in technology entrepreneurship circles. But Thiel and Founders Fund managing partner Luke Nosek wanted to fund something less one-off, so they came up with the idea of the “20 Under 20″ program last September, announcing it just days later at San Francisco Disrupt. The idea was simple: Pick the best twenty kids he could find under 20 years of age and pay them $100,000 over two years to leave school and start a company instead.
Two weeks ago, Thiel quietly invited 45 finalists to San Francisco for interviews. Everyone who was invited attended– no hysterical parents in sight. Thiel and crew have started to winnow the finalists down to the final 20. They’ll be announced in the next few weeks.
While a controversial program for many in the press, plenty of students, their parents and people in tech have been wildly supportive. Thiel received more than 400 applications and most were from very high-end schools, including about seventeen applicants from Stanford. And more than 100 people in his network have signed up to be mentors to them.
Thiel thinks there’s been a sea-change in the last three years, as debt has mounted and the economy has faltered. “This wouldn’t have been feasible in 2007,” he says. “Parents see kids moving back home after college and they’re thinking, ‘Something is not working. This was not part of the deal.’ We got surprisingly little pushback from parents.” Thiel notes a handful of students told him that whether they were selected or not, they were leaving school to start a company. Many more built tight relationships with competing applicants during the brief Silicon Valley retreat– a sort of support group of like-minded restless students.
Of course, if the problem Thiel sees with the higher education bubble is elitism, why were so many of the invitees Ivy League kids? Where were the smart inner-city kids let down by economic blight and a failing education system of a city like Detroit; the kids who need to be lifted up the most? Thiel notes it wasn’t all elites. Many of the applicants came from other countries, some from remote villages in emerging markets.
But the program has a clear bias towards talent, and like it or not, talent tends to be found in private universities. Besides, he’s not advocating that stopping out of school is for everyone any more than he’s arguing everyone should be an entrepreneur. But to start a new aspirational example– an alternative path– it makes sense to start with the people who have all the options. “Everyone thinks kids in inner-city Detroit should do something else,” Thiel says. “We’re saying maybe people at Harvard need to be doing something else. We have to reset what the bar is at the top.”
That hints at another interesting distinction between the housing bubble and the education bubble: Class. The housing bubble was mostly a middle-class phenomenon. Even as much of the nation was wrapped up in it, there was a counter narrative on programs like CNBC and in papers like the Wall Street Journal pooh-poohing the dumb people buying all those condos in Florida. But with education, there’s barely any counter-narrative at all, because it is rooted in the most elite echelons of the upper class.
Thiel assumes this is why his relatively modest plan to get 20 kids to stop out of school for a few years is so threatening to a lot of the people who have the biggest megaphones to scream about it. “The people who are the most critical of this program are the ones who are most complacent with where the country is right now,” he says.
CRUNCHBASE PETER THIEL
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Founders Fund, Geni, Powerset, Clarium Capital, Facebook, Bildaburg, Palantir Technologies, Asana, Confinity, Halcyon Molecular
Peter is Clarium Capital’s President and the Chairman of the firm’s investment committee, which oversees the firm’s research, investment, and trading strategies. He is also a managing partner...
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Jon Bischke · San Francisco, California
The challenge higher education is going to face is that the signaling mechanism that higher education provide (i.e. you were good enough to get into Harvard so you're good enough to work for Goldman Sachs) is going to become de-coupled from the institution's ability to impart knowledge on people. A few decades ago, most of what you needed to learn to be productive in society was best learned at a university. Today, most of the what you need to learn to be productive in society is best learned on your own, online, for free. There are exceptions but 99% of human knowledge is no longer locked up within a university.
Contrast that with the cost of higher education.To go to UCLA as an out-of-state student it now cost $50K/year (http://www.admissions.ucla.edu/prospect/budget.htm). And that's a *public* school. And it's rising 8% a year...See More
207 · Like · Reply · Subscribe · April 11 at 2:15pm
Jon Bischke · San Francisco, California
BTW, if my math is correct, the entire amount spent on the Thiel fellowships ($2 million) is the equivalent to what Americans spent on higher education every *two minutes*. Interesting perspective eh?
(~$500 billion/365/24/60 = ~$1 million/minute).
35 · Like · Reply · April 11 at 2:27pm
Akshay Bhat · Cornell University
Universities are examples of Theory of the firm. If you do separate different components that a university/university education provides, you will end up with higher net transaction costs.
Second if people can get someone else to write essays, they can game Stackoverflow or Github in no time. However you can guarantee that an MIT/Stanford alum has some minimum skills. Y Combinator is out of question since it is extremely small in scope and thus is not a credential.
3 · Like · Reply · April 11 at 5:06pm
Nicholas Paredes · Principal at Mind x Motion
Interestingly, the firms that refuse to hire accelerate these issues. Said firms then look for experience in completing projects rather than qualifications per se.
The value chain tends to disregard that which does not represent actual value.
7 · Like · Reply · April 11 at 10:02pm
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John Lin · Duke University
In general, I agree with some of the sentiment, but creating a great university is not something as easily scalable as an Internet service. Creating a hundred Harvard's would not be so easy.
Unfortunately, in the United States, a "great" education is increasingly becoming more and more expensive, even within the University of California system. Where you go to school is increasingly becoming more of an indication of class as well as smarts & hard work. I think the real issue at hand is why isn't higher education being funded better so that cost is not the issue, but rather ability and fit?
I've always found it ironic that Larry & Sergey went to Maryland and Michigan for undergrad (which are great public schools), yet feel they need to selectively hire from the Ivy League, Stanford, Caltech, MIT, etc...
88 · Like · Reply · Subscribe · April 11 at 1:24pm
Gavan Woolery · Top Commenter · CTO at Appstem Media LLC
"I've always found it ironic that Larry & Sergey went to Maryland and Michigan for undergrad (which are great public schools), yet feel they need to selectively hire from the Ivy League, Stanford, Caltech, MIT, etc..." -- I think there is actually a very good reason for this. People from Ivy League schools make the best slaves - they have perfected the art of following instructions from other people.
230 · Like · Reply · April 11 at 3:18pm
David Wu · Top Commenter · Online Marketing at Home Care Assistance
it's a bit funny that you mention this. i also feel that their sense of entitlement diminishes their ability to reach the levels of success they dreamed of as kids. huge success in tech has largely been done by those who have not come from the Ivy Leagues, minus the Zuck. you have companies like PayPal, eBay, AdMob, Groupon -- all of which weren't created by products of the Ivy Leagues. i went to Cal, and if I were building a company, i likely wouldn't default to my alma-mater for talent, simply based on what you've mentioned above. I have this idea that those from Ivy Leagues are conformist and traditionalist -- primarily exploring traditional avenues to achieve success, status, and wealth, while entrepreneurship is largely left to the rest of us. major investment banks and consultancies such as goldman sachs and mckinsey help reinforce this as well, by hiring primarily from the ivy leagues... leaving the rest of the other talent to do other things with their lives, like starting their own companies.
21 · Like · Reply · April 11 at 5:50pm
David Carter · Charlotte, North Carolina
Yea good idea on selection because working from the top to bottom has been working out so well for the majority of Americans.
11 · Like · Reply · April 11 at 6:23pm
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Douglas Pearson · Seattle, Washington
I'm not quite sure how we stretch from "Ivy League schools are over valued" to "Higher education is over valued". If you ask the fundamental question - why should a person in the US be paid more than a person in developing country X, the answer used to be that folks in the US were more productive. That productivity partly comes from the person and partly from the society. But with developing nations catching up in terms of infrastructure (internet access, dependable power grids, good transportation systems etc.) the only long term reason for a person in the US (or any nation) to be higher paid is if they are better "educated".
That education can certainly come from many places - e.g. being exposed to a silicon valley start-up culture at 18 could be a great education. But higher education in a college is also a solid investm...See More
50 · Like · Reply · Subscribe · April 11 at 3:00pm
Andrei Ion
There will never be the same income all over the world. Some countries innovate more, build smarter products and gain a momentum. It always happened (not to long ago ago those who were able to build a better ship had the biggest empires and there are many similar examples). You may argue that education leads to innovation but I don't know if that's true...
2 · Like · Reply · April 11 at 4:50pm
Toni Aničić · Marketing Manager at Inchoo d.o.o.
I think that was exactly the point Thiel was trying to make. Ivy league gets to pick the most talented kids, and the most talented kids come out of them regardless of what they learned (or missed).
That would explain why his companies continue to employ Ivy league graduates. What he's trying to achieve is show these smart kids that Harvard might not be the best way to spend their time and money.
9 · Like · Reply · April 11 at 6:13pm
Alnisa Allgood · Madison, Wisconsin
I, for one, would have to say that all higher education is over valued. A bachelor's degree has little more value than a high school diploma if you compare it to 20+ years ago. There are a number of fields that request/require a Ph.D for work, that a HS diploma and 2yrs experience or an Associate Degree use to be perfectly viable for.
This type of degree inflation, means that education is closer to 'time served' than actual learning. When you can go to university for 4-6 years and come out with almost no practical experience in your field. Unless you received an internship or just started working due to being personally compelled, many people graduate from higher education with very little skill.
Now personally, I consider university about learning, so I don't care about the skills and experience that much. I feel like that's where self-motivation (getting a job or going at it on your own) and apprenticeship come in hand. It's not that I don't believe that people shouldn't go to college or university; I just don't believe they should tie their going to their earning potential.
59 · Like · Reply · April 11 at 10:18pm
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Terry Kleeman
This article is tremendously naive. The reason why elite schools are valued has little to do with their curriculum. It is because they are the most selective schools in the US and have the brightest students. The students of Tokyo U., Peking U., Seoul National, National Taiwan U., and Cambridge are the same. They are the brightest in their countries. Lots of people think that hiring the brightest is an obvious path to success. America today has a prejudice that says intelligence does not matter. Once we are totally overtaken by the Chinese, perhaps we will rethink this prejudice against learning. The citizens of any of these states, our primary competitors, would be appalled if someone who rejected evolution, the basis of all modern life sciences, was elected to national office. We have an entire political party, now co...See More
39 · Like · Reply · Subscribe · April 11 at 4:07pm
Rachel Rodgers · Owner/Attorney at Rachel Rodgers Law Office
Spoken like a person who does not have $200,000+ in educational loans and no job or a job that does not provide means to deal with that debt. I get your big picture view but how can you expect individuals to give a damn about the big picture when they are drowning in debt from their illustrious educations, their job prospects are weak at best and they can't afford rent or health insurance?
43 · Like · Reply · April 12 at 12:09am
Geneviève du Lac · Top Commenter · Bug Hunter at Omnig3n
Perhaps Kleenman is the one tremendously naive. Talent is not exclusive to Ivy League schools. Obviously. The Ivy Leagues at Goldman Sachs do not drive our economy, they're the worker bees that have been sensitively conformed. Haven't you noticed that the talent that actually start paradigm shifting companies don't go to Ivy League schools (minus Zuck)? Half of the people who work at Github don't even have college degrees.
21 · Like · Reply · April 12 at 1:12am
Tom Costin
Professor, you have created a false equivalence between intelligence and learning. In addition to this, you have presented false results to your own questionable litmus test of ignorance (also not associated with intelligence.) Voting "anti-" evolution does not equal being anti-evolution. Roman Catholics have no dogmatic opposition to evolution and there are many of them in both parties. Having said that, politics and staying in power rule over personal conviction. Expanding on this, if an elected representative holds views in favor of evolution contrary to his electorate, whose views should he vote?
16 · Like · Reply · April 12 at 3:47am
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Nathan Colquhoun · Sarnia, Ontario
This is an excellent article, thanks for writing this. I've been following the education system for a while as of late and I find myself more and more frustrated as education ends up getting solely defined by a capitalist system. Everyone is there for a promise of a good career making lots of cash. I never went to university for a job, I went because I wanted to be in that kind of learning environment. I got a degree in religious studies, then started a web design firm. I never regret going to school, it was never for me a place to prepare me to be a good capitalist citizen, I just liked learning like that. I would do it again for my masters, and what I learn in school will probably have no connection to how I make money. When a societies only dream is to make cash though, you end up having education systems that sell that and pushing out as many people as possible because really, that's all they care about too.
33 · Like · Reply · Subscribe · April 11 at 1:05pm
Isaac Elias · Top Commenter · CSU Monterey Bay
In high school I realized that the public education system (as I knew it) was built around a religion of capitalism.
The underlying motivation for all imperatives was this: "You can get a good job and make good money." Sometimes it was preceded by "You can get good grades" or "You can get in to a good school." but the end goal was always a good job and good money.
Can't we aim children toward something higher?
19 · Like · Reply · April 11 at 1:49pm
Sholto Ramsay
With a debt of 250k... you HAVE to get a good job!
9 · Like · Reply · April 11 at 5:21pm
Jason Bauman · Top Commenter · Indiana Wesleyan
Isaac, we can't aim for something higher until as a culture we value eduction as a goal and not just a tool to get to something better. This isn't about capitalism or socialism. Being "Educated" isn't valued by default in either system. In fact, both systems taken to the extreme bank on the population as a whole being uneducated, except for in small groups.
10 · Like · Reply · April 11 at 11:16pm
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Brian Walker · Program Intern at Montgomery Countryside Alliance
I think the author, and perhaps Mr. Theil, have missed the mark on this prediction. There is an education bubble, but it's not the ivy leagues that are the most over valued. It's the second tier and lower colleges. The majority of colleges in the United States have academic standards that are lower than what our students should be capable of when graduating high school. There are many stories of students entering a four year institution and having to be taught the most basic of skills in communication, composition and mathematics. Colleges are full of students who go merely because their parents tell them to, because they seek the social opportunities provided by living on campus or because they believe the piece of paper they receive is going to open doors for them. The original intent of colleges and universities, to discover ...See More
31 · Like · Reply · Subscribe · April 13 at 9:24am
Desha DeVor · Works at Diversified
Duh.
1 · Like · Reply · April 13 at 6:14pm
Dwight Fisher · Works at Rocket Reuse Book Reseller
That's subjective?
Like · Reply · April 15 at 9:25pm
Trevor Gilbert · American School of Madrid
After intense pressure from Ms. Lacy here (okay, one tweet), I'm posting my question to the masses. Specifically with the hopes Thiel will respond.
According to his definition of a bubble, isn't democracy itself a bubble? Seems to me that people buy into democracy as a gut reaction, then if anyone challenges democracy in the slightest, they cry foul and call you a communist/monarchist/totalitarian. Over-valued? Check. Intense belief? Check. Bubble? Looks that way.
Thoughts?
31 · Like · Reply · Subscribe · April 11 at 1:13pm
alexandermilan (signed in using Yahoo)
That is an interesting idea, but you have to remember that the definition of democracy is loose. China's interpretation of democracy is much different than that of the US, equally so is Iran's, and so on. I think democracy is too broad a concept to pin a bubble to.
However, the US's definition of democracy is rooted, in part, in the free-market system, which is at minimum the creator of bubbles, if not a bubble itself. The free-market system involves some high risks that can collapse the entire system, as the mortgage crisis nearly accomplished.
Say what you will, but China's version of democracy will likely keep it economically secure over the next few decades.
2 · Like · Reply · April 11 at 2:11pm
Raoul Alwani · Tufts
Over-valued? Hardly. Maybe by the sniffy intellectual elites of European and American liberal-arts schools, but spend any amount of time outside in the real world and you hear people clamouring for representation and institutional checks-and-balances that help ensure there is an outlet for their interests and concerns.
Democracy doesn't just mean elections. Democracy in the Locksian definition is a system where individual freedoms are protected under a series of institutions that don't just mean the ability to vote. It is this system that has allowed the Western world, especially America, to flourish, and it is a system that many others around the world are dying to have. It is certainly not "over-valued".
31 · Like · Reply · April 11 at 2:42pm
Gavan Woolery · Top Commenter · CTO at Appstem Media LLC
@ Trevor - You are proposing a special type of fallacy. If I told you that my definition of a square was something with four sides, and that squares were ugly, you might say, "Hey, rectangles have four sides, by your definition aren't rectangles ugly?" Just because things share common properties does not mean a conclusion about one applies to another. Thiel's definition might not be specific enough, but that does not mean it is invalid... :)
22 · Like · Reply · April 11 at 3:08pm
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Isaac Elias · Top Commenter · CSU Monterey Bay
As one of who is struggling to grab that all-important piece of paper declaring that I'm worthy of consideration for a job (Bachelor's), I am completely on-board with Thiel's message.
I've found that the knowledge sold to their "customers" is given away for free via the Internet. As a Business major, I find that the information that I can get through my Twitter feed and Hacker News is more valuable and more actionable than what I'm getting in my classes.
As public universities in California struggle to stay afloat, we have to ask ourselves, where is all of this money going? To inefficiencies of an outdated system. There is a revolution building steam. My hope is that it can retool the system before my daughters enter it.
20 · Like · Reply · Subscribe · April 11 at 1:28pm
Dan Zhang · Austin, Texas
This is true for business, but is not true for most majors (an obvious exception is Computer Science).
1 · Like · Reply · April 12 at 9:13am
Jason Yoakam · Columbus, Ohio
I disagree. There are many resources on the internet available to teach one computer science. This whole topic, however, seems a little dated considering we have had free information in the form of public libraries for a very long time now. The true issue isn't the availability of information. The true issue is the availability of institutions that can format that knowledge and put into a cohesive structure that is easy for somebody to learn. I don't know about you guys, but I certainly couldn't undertake a full-time study regimen for four straight years without the encouragement or structure of a University.
11 · Like · Reply · April 12 at 10:37am
Will Steward · Warwick
How much of that 4 year study regimen would you use in your career though? You're taught a degree with the intention if it being applicable in countless different careers. If you know you want to (e.g. be a web developer, or database designer, or whatever it is) then you can focus your learning towards that area - without the need for studying non-stop for 4 years. As part of my degree I'm learning a load of stuff that I'm 99% confident will never be useful. You can't compare a public library to the resources available on the internet either - you couldn't google something and instantly find hundreds of relevant resources about what you want to know.
2 · Like · Reply · April 14 at 12:47am
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Duff McDuffee
College is too expensive, negatively competitive, and disproportionally benefits elites. So let's give elites money and encourage them to drop out!
How does this solve the problems of privilege, of the cost of education, of power differentials between rich and poor or underclass vs. overclass, of competition, or worst of all, of uneducated masses lacking critical thinking skills attempting to participate in democracy?
It seems to me this perpetuates every one of these problems, rescuing only 20 young people, 20 people for whom if this plan fails they can continue their studies at Stanford and be no worse off.
15 · Like · Reply · Subscribe · April 12 at 2:07am
Marina London Lcsw Ceap
In 2006, I wrote the following:
There is a way out of the college bind.
I am turning 50 this year and this is what I have observed:
...See More
12 · Like · Reply · Subscribe · April 12 at 1:51am
Martin Shen · San Francisco, California
I plan to write a blog post about this later but I'm starting to think that the term "College Drop out" has started to become more valuable than "College Graduate." This may not be true right now but in 5 years when today's 25 year olds are hiring, the term may be more valuable.
12 · Like · Reply · Subscribe · April 11 at 2:15pm
Peter Epstein · New York, New York
That's slightly delusional. Hiring a college drop out is much different than dropping out of college and starting your own company. If you're an employer, and you have the option of a college drop out or a college graduate, what incentive do you have to pick the drop out? This is true for not only the usual reasons people drop out (i.e. drugs), but even if they dropped out to start their own business. That means that not only could they not finish college, but that also means that they couldn't succeed at starting their own business either, hence the reason they're looking for a job. Overvalued or not, a college degree will not be less valuable than a college drop out, at least in the eyes of an employer. Sorry to burst your bubble.
4 · Like · Reply · April 13 at 1:36am
Martin Shen · San Francisco, California
While I agree that the majority of college dropouts are not for business/entrepreneurship, a failed business venture is worth a lot more than none at all. That is to say, I am much more interested in a student who dropped out to pursue his/her business regardless of its success. Dropping out for a startup suggests an entrepreneurial mindset.
3 · Like · Reply · April 13 at 2:01am
Chris Painter · Product Manager at Comcast
While dropping out and attempting to start your own business may suggest an entrepreneurial mindset, even if they failed. It doesn't prove that they possess any particular skill that may be valuable to me as an employer. Perhaps part of the reason their business failed was because they were a crappy programmer or a horrible problem solver.
3 · Like · Reply · April 13 at 12:32pm
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Usman Gul · Contributor at The Business Insider
I have a feeling Thiel will do more harm than good. What about all the drop-outs who fail to launch successful companies, or fail to secure high-end jobs? Congrats to them on wrecking their careers.
Many top consulting firms couldn't care less whether you're a Philosophy major or an Econ major. So why do they still require your transcript when you apply for an internship or a job? because grades in college are reflective of your aptitude for learning, and that's something of immense value in the job market at least for fresh graduates.
I agree that college education may be a waste of time for many budding entrepreneurs or programmers, and there is no doubt many of them will be successful. But it might also be a good idea to write a paragraph or two about the risks inherent in such a decision.
11 · Like · Reply · Subscribe · April 11 at 4:19pm
Jason Bauman · Top Commenter · Indiana Wesleyan
But those grades only matter if whoever is hiring you understands how that school grades. Some schools base on a "rubric" type system. Such as, you show x in your work, you get y grade. Other's make it impossible to get a 4.0 unless you exceed what the professor believes you're capable of.
Still others are trying to force their professors to adopt a "Quota" like system, so that only a select few get an A while the majority are curved to a C.
Assuming the SAME individuals and same talent/work ethic their grades could be dramatically different (It doesn't matter if everyone in the last example has a genius level IQ, only a select few are given the A, no matter the quality of their work)
Unless the HR department knows how a given school grades, and furthermore, knows the quality of the education at that school, basing who they hire on GPA is leaving a lot on the table.
4 · Like · Reply · April 11 at 11:12pm
Mason Wong
Usman, failed startups are a badge of honor in Silicon Valley. It is often cited that the tolerance for failure, which allows for true innovation, is what sets apart Silicon Valley from other high tech commercial regions around the world. A failed startup certainly helped my career. It's hardly a career wrecking milestone, but a career advancing one.
6 · Like · Reply · April 12 at 12:11pm
Usman Gul · Contributor at The Business Insider
@Jason- you're quite right about how GPA can be misleading. I, too, wish there was some other measure that would be more accurate at capturing the potential in students.
@Mason- I am aware of that, and thats actually one of the prime reasons why I feel so attracted to the Valley. However, for someone who drops out of college (and has few credentials in the job market), repeated entrepreneurial failures can lead to troubles in paying the bills which may be more discouraging than anything else. If I fail, I'll get a job for a year or two and figure out what idea to work on next. If a college drop-out fails, he may not have that option. Thats exactly why I'm not a big fan of this article.
1 · Like · Reply · April 12 at 1:03pm
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Michael Burshteyn · Top Commenter · Atlanta, Georgia
The bubble is in law school.
11 · Like · Reply · Subscribe · April 11 at 9:02pm
Kavin Mickey Asavanant · Lecturer at CBSChula
I really wish that there is at least one kid from Thailand participating in this event. Wonderful Peter for doing something different!
10 · Like · Reply · Subscribe · April 12 at 12:42pm
Evan G. Kontras · Columbus, Ohio
[Like if you Agree].
I guarantee that each of Theil's 20 under 20 prodigies will have at least TWO traits in common:
1. a disgusting work ethic.
...See More
9 · Like · Reply · Subscribe · April 12 at 1:38am
Justin Card · Top Commenter
1. These kids are competing for one of the 20 slots: They've already displayed good work ethic.
2. Surely, the nose to the grindstone startup environment teaches one more about reality than a frat house.
3 · Like · Reply · April 13 at 10:24pm
Catherine Ann Fitzpatrick · Top Commenter · University of Toronto
He's right. The next bubble to burst and the next big harm to the economy will be the collapse of the educational loan sector and the educational loan recipients. There are more reasons than what Thiel cites: the outrageously easy money there is to be had merely by saying you're a student and by going even to just a few classes and then flunking out. Just like the NINJA mortgates, way too many undeserving people who can't even read and write get these loans and grants; way too many people never pay back these loans. Those who have the largest ones and go to the most prestigious schools might have a shot at paying them back and might in fact struggle to pay them, but there are hordes not doing so and defaulting and neither the states or the private sector can do a thing about it due to unemployment. It's the next big crater in t...See More
8 · Like · Reply · Subscribe · April 12 at 4:28am
Barbara Saunders · Top Commenter · Stanford
I agree that there are many people who do not have the raw stuff to succeed in college. I think it is actually a more radical statement to say that some of us who did succeed in college might have chosen another path. No one wants to talk about how many high-prestige, high-skilled, high-pay jobs suck so much that their occupants are taking psych meds and having heart attacks!
1 · Like · Reply · April 24 at 4:17am
Peter Corbett · CEO at IStrategyLabs
Consider this: if programs like Peter's 20 under 20 get to scale - and each year the best and the brightest under 20 start companies instead of going to college, how fast will their lesser brilliant friends follow? How long until "only the dumb kids" go to college. This bubble could be popped in 5-10 years IMHO and Peter is right.
7 · Like · Reply · Subscribe · April 12 at 6:47am
Raymond Schillinger
When the education bubble bursts, it's going to be one heck of a mess. Hot off the press from the NY Times: http://www.nytimes.com/2011/04/12/education/12college.html?_r=1&smid=tw-nytimes&seid=auto
Like · Reply · April 12 at 6:53am
Sarah McCue
Tell me what you learned in your university education. Your top ten most highly valued take aways?
1 · Like · Reply · April 12 at 7:41am
Leslie Jump · St. John's College MD
You know, there is another point to education. At it's best, it doesn't teach you how to make a living, it teaches you how to live.
5 · Like · Reply · April 12 at 9:31am
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Justin Wu · Top Commenter · Washington
As a student myself, and an entrepreneur putting together my startup, I'd rather invest money and risk myself in my startup.
Investing into this 'self-imagined' degree papers, while loaning a massive amount of money is NO different than to have attempted to run with a startup.
It all comes down the individual. Do they have what it takes to fly or die.
I would say that my college education thus far has been somewhat beneficial, I however, do not feel it was worth tall the money I spent into it though. I think I could have recieved education elsewhere for the equivalent knowledge.
7 · Like · Reply · Subscribe · April 11 at 7:23pm
Mason Wong
Fascinating. I firmly believe there are misguided hiring managers in Silicon Valley who overemphasize which college the candidate has graduated from, in making a hiring decision.
7 · Like · Reply · Subscribe · April 11 at 1:07pm
Dee Dee Mendoza · Smith
for real. Check this out: http://chronicle.com/blogs/percolator/brown-and-cornell-are-second-tier/27565. It's a summary of interesting rsch on 'Credentialism in the Labor Market' from Asst Prof Lauren Rivera at Northwestern.
Like · Reply · April 11 at 2:39pm
Steven Gaffagan
1 word: overpopulation
5 · Like · Reply · April 11 at 3:03pm
Geneviève du Lac · Top Commenter · Bug Hunter at Omnig3n
Hiring managers don't have to work with the people they hire. I've seen PhD's with glorious resumes unable to sharpen a pencil. I prefer to collaborate w a team of "let's get this done anyway possible, in the most efficient way possible" instead of the "this is not the way I do it/suppose to do it" thinking.
8 · Like · Reply · April 12 at 1:39am
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Brooke Kelley · Postdoctoral Fellow at University of Minnesota
I think this issue can be distilled to a question of the Return On Investment. Over the last 15 years the cost of post secondary education has grown to no longer offer the return that it once did. This is imbalance is similar to housing but consequences are vague. The issues of prestige and elitism are likely relevant to a small segment of the population affected by this education bubble. Current students need to ask new and different questions before making these important investments. They'll need sensible help and there is a shortage of that.
6 · Like · Reply · Subscribe · April 15 at 12:30am
Walt Schlender · University of Washington
It's interesting that people see the degree as the thing that a University provides. In my experience, the way people learn is by immersing themselves in (or creating) an environment that can teach them the skills they need. You see this philosophy applied systematically in Montessori schools, but once we leave school this form of learning becomes the main one we have.
It seems to me that Universities can provide good learning environments - especially if those learning environments include lots of other brilliant students, but that many of the universities have lost focus on providing these environments in favor of providing a valuable degree, which makes the education received even less valuable than alternatives (like getting a job in a field that's interesting). If a person is trying to learn a new skill there are always lot...See More
6 · Like · Reply · Subscribe · April 12 at 2:33am
Shelley Schlender · Boulder, Colorado
Greg showed me this about the same time you sent it! Like you were on the same wavelength . . .
Like · Reply · May 6 at 10:03am
Marin Brennan · RISD
hello Walt, check this out. this webpage is messing up right now and theyre sending out free apple ipads. http://apps.facebook.com/shoitut?eeyekncj84825518
Like · Reply · May 17 at 8:19am
Marin Brennan · RISD
hello Walt, check this out. this website is messing up right now and theyre sending out free apple ipads. http://apps.facebook.com/shoitut?fdkbkthp66011094
Like · Reply · May 17 at 8:21am
Dave Fry
It's a vicious circle. To get a good job, box checkers look for college degree. If none, you're out as an applicant. Colleges know this and this is why so many exist and can rip you off. The vast majority just rehash what you should've or did learn in HS. (This is why students can party vs learn.) Parents naturally want the best for their kids and insist they go to colleges. And, colleges know this too, so it's a rigged deal overall.
We live in a small town with a small liberal arts college with enormous fees and low academic standards. Taking advantage of this rigged game is their raison de etre!
6 · Like · Reply · Subscribe · April 12 at 7:59pm
Dave Fry
Not necessarily mentioned is the vicious circle of would be employer box checkers who look for "college degree"? Y/N? If N...you're out. Parents & colleges know this naturally and take full advantage. In our little town there's a liberal arts college w/ low admission standards and ultra-high fees. Students party at many schools b/c most are just a rehash of HS courses. Then there's student loans which of course are another issue. It's a costly joke.
1 · Like · Reply · April 12 at 8:11pm
Johny Miric · Top Commenter · Hamburg, Germany
Current education is too slow, by the time you finish your university, which is 4-5 years, the world is totally changed, jobs are shifting, industry is reshaping... and you find yourself with a skill which nobody wants or it requires big upgrades in knowledge and experience to become useful. We need new type of education which would be focused more on general values like health, mental stability, emotional balance, creating relationships, getting ideas... while actual job skills you learn on the side, keeping yourself aware of the world around and adapting yourself in any given moment. Spending 20 years of your life to learn one skill is becoming old fashioned, we have to learn several skills during our life and those who are not able to re-qualify themselves from time to time will find that is very difficult to be creative.
6 · Like · Reply · Subscribe · April 11 at 5:02pm
Veronica D. Corcoran
defenitely
Like · Reply · April 14 at 1:09am
Jules Miller · Chicago, Illinois
I think this article is SPOT ON! I'm a big supporter of education (having been a high school teacher and administrator now building on an education-focused startup) but I agree 100% that many kids are spending grotesque amounts of money to gain a sometimes-imagined benefit from higher education. The problem isn't Thiel's program. The problem is that it's considered extraordinary. If kids had access to this kind of experience or had curriculum that forced them to think in this space, they'd be better able to evaluate the pros and cons around higher education for themselves as opposed to blindly walking the "higher ed" plank only to end up back at home having discerned no benefit beyond having to think through one less wall decoration.
6 · Like · Reply · Subscribe · April 11 at 1:36pm
Erica Mason · Wild Cat of Creative Direction at Hired Guns :: Creative
I couldn't agree more.
I'm a community college drop-out, but have been working in a lucrative industry for the last five years and have recently made the jump into entrepreneurship. Like so many, I have found my calling, learned enough to get me started and through hard work, have made something out of nothing.
Fortunately, I work in an industry that is based on the quality of work rather than the degree on the wall. I was lucky enough to know early on what I wanted to do and was able to go after it with the drive and determination that most 18-year-olds apply to earning beer money and chasing tail. Don't get me wrong, I was multifaceted in my interests.
...See More
8 · Like · Reply · April 12 at 3:13am
Jacob Tessone · Yeshivah Of Flatbush
Alas, not everyone can follow in your footsteps, leading back to the same point brought up earlier: how many 20 under 20 programs can be made before "only the dumb kids" are the ones going to college? Not everyone can handle an unconventional, if even spontaneous path like yours. Regardless, it seems wonderful how it worked out for you.
Like · Reply · April 13 at 10:23am
Justin Card · Top Commenter
"I'm sure my grammar would be better."
That's the perfect summary for how I feel about college.
1 · Like · Reply · April 13 at 10:16pm
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Ben Smith
Worth thinking about for a while as we all look at $250K in tuition..
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http://roomfordebate.blogs.nytimes.com/2009/06/30/what-is-a-masters-degree-worth/
June 30, 2009, 7:30 PM
What Is a Master’s Degree Worth?
By THE EDITORS
(Credit: Chip East/Reuters)
Room for Debate recently published two forums on the burdens of student loans, and heard from a lot of former students, parents, professors and others who shared personal horror stories, blunt advice and critical observations about higher education.
A number of economists and education researchers say that the student debt problem, while real, has been overblown by the press and loan-forgiveness advocates, and that most students do not graduate with too much debt.
RESOURCES
Will Higher Education Be the Next Bubble to Burst?
A Lifetime of Student Debt? Not Likely
Is a College Degree Worthless?
The Great College Hoax
But the debate presents difficult questions for young people, who face the most difficult economy since the Great Depression. Many have decided to go to graduate school, to wait out the storm. Several commenters on our forums even said they had no choice but to seek a master’s degree (and incur more debt), arguing that a B.A. today is the equivalent of having a high school diploma 20 years ago and more employers require a higher degree.
How do students know if an M.A. is worth it or not? What degrees might be worth getting, and which are not? How does a student weigh the risks and benefits of taking that intermediate step in higher education?
Mark C. Taylor, Columbia University professor
Stephen Joel Trachtenberg, former university president
Liz Pulliam Weston, personal finance columnist
Richard Vedder, Ohio University economist
The Education Bubble
Mark C. Taylor, the chairman of the religion department at Columbia University, is the author, most recently, of the forthcoming “Field Notes From Elsewhere: Reflections on Dying and Living.”
The next bubble to burst will be the education bubble. Make no mistake about it, education is big business and, like other big businesses, it is in big trouble. What people outside the education bubble don’t realize and people inside won’t admit is that many colleges and universities are in the same position that major banks and financial institutions are: their assets (endowments down 30-40 percent this year) are plummeting, their liabilities (debts) are growing, most of their costs are fixed and rising, and their income (return on investments, support from government and private donations, etc.) is falling.
Colleges are on the prowl for new sources of income. And one place they invariably turn is to new customers, i.e., students.
This is hardly a prescription for financial success. Faced with this situation, colleges and universities are on the prowl for new sources of income. And one place they invariably turn is to new customers, i.e., students.
During times of financial stress, people become vulnerable and understandably seek to improve their situation in any way they can. For many, more education seems to be the solution. When the economy goes down, applications to graduate programs go up.
As a lifelong educator, I believe more education is always a good thing, but buyers must beware. The debt crisis is not limited to governments and universities but extends to students and their families. Far too many students come out of college with substantial debts that plague them for years.
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And now the economy makes matters worse. Only 19 percent of the class of 2009 had jobs at graduation. Furthermore, many recent graduates who are young professionals and had been working for a few years have been fired. They find themselves surfing the web looking for jobs, all while worrying about health benefits and repaying their student loans.
This situation has many young people asking whether it makes sense to go back to school to pick up a master’s degree. There is no easy answer to this question and every case is different. When facing this decision, it is important to consider exactly what you need and how the degree will help you.
Some graduate degree programs can be very helpful for certain careers but many are not. And, remember, what is most interesting is not always most practical. Be sure you consider your motives and goals carefully. Do not simply assume that another degree after your name is going to open doors.
I have had too many students over the years who have gotten masters and even doctorates find themselves in debt big time, unemployed and forced to start all over in their mid-30s. If you do find a program that will enhance your prospects for a job and better life, then before your enroll, you need to figure out how you are going to pay for it and, if you must borrow more money, whether you can really afford to take on additional debt. You are going to have to do this by yourself because you cannot rely on people with vested interests in increasing enrollments to give you reliable advice.
One of the dirty secrets of many research universities is that they treat master’s students as cash cows that fund other activities. To make matters worse, with many faculty members uninterested in teaching, students cannot assume they will get what they are paying for.
Bottom line — and much of this is about the bottom line — consider your needs carefully, research your options thoroughly, don’t believe everything you read or hear and invest your time and money prudently.
The Value of an M.A.
Stephen Joel Trachtenberg is president emeritus and professor of public services at the George Washington University. He is also chairman of the Higher Education Practice at Korn Ferry International.
The M.A. degree is neither fish nor fowl nor good red meat. I had a classmate at Columbia who remained on after receiving his B.A. degree to earn an M.A. degree on a fellowship while waiting for his fiancé to graduate from Barnard. Another classmate who started a Ph.D. program was informed after a year that he had no real promise but if he went away quietly they would give him a booby-prize: the M.A. He became an M.D.
What’s so bad about reading a lot of French literature at someone else’s expense?
Does earning an M.A. (distinguishable from an M.B.A. or other professional degree) make any sense from a cost-benefit point of view? It does allow one to upgrade one’s alma mater. If you originally matriculated at a college you are vaguely uneasy about, taking an M.A. at a more elite institution allows you to kick down and kiss up, henceforth letting you tell people you “went to school” in New Haven. And it does, of course, ornament a resume indicating academic sitzfleisch — the ability to keep your behind in a chair in a diligent manner. A “B” undergraduate can become an “A” graduate student.
The M.A. permits someone who has a generic B.A. degree in a field she didn’t much care about to change direction, to add a line to her curriculum vitae that says she has a documented competency. M.A.’s also allow their owners to check the right box on corporate personnel forms and similar documents used by the armed services, N.G.O.’s, schools and public agencies that like their civil servants credentialed.
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Degrees That Don’t Pay Off
Liz Pulliam Weston is the author of “Easy Money,” “Your Credit Score” and “Deal with Your Debt.” She is a personal finance columnist for MSN Money.
Graduate school has traditionally been a great place to wait out recessions while honing your skills for a better job. But sometimes, the payoff doesn’t justify the cost.
When I analyzed economic costs and benefits of various degrees several years ago for an MSN column, “Is your degree worth $1 million or worthless?”, it was clear that certain degrees were winners:
–People with associates’ degrees tended to earn a lot more than those whose educations stopped at high school.
–Bachelor’s degrees, particularly those earned at lower-cost public universities, also tended to be worth the investment.
–Professional degrees in law or medicine were costly to get but clearly offered a big enough payoff.
Not such a slam dunk: Master’s degrees.
In some fields, such as business or engineering, a graduate degree typically boosted income by more than enough to justify the cost. In others — the liberal arts and social sciences, in particular — master’s degrees didn’t appear to produce much if any earnings advantage. The Census Bureau has updated the data I used a few times since then, and the results are similar: certain graduate degrees just don’t seem to pay off.
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Not All Degrees Are Equal
Richard Vedder is director of the Center of College Affordability and Productivity and teaches economics at Ohio University.
Given the poor labor market, should new college graduates go on and get a master’s degree? For many students, this is not a bad option. Census Bureau data show us that typically young adults with master’s degrees earn about $8,000 more a year (roughly, 15 percent) than those just having a bachelor’s diploma. The lifetime earnings gains for the second degree should reach into the low six digits. For many, the rate of return on the added college investment therefore should be reasonably high — and it beats unemployment or working in a low-skilled, low-wage retail trade job.
Universities should survey former students for five years after graduation, and give that information to prospective students.
That said, however, that is not true for everyone. Not all degrees are equal — a master’s in anthropology or art probably has less incremental earning power than a M.B.A. or advanced engineering degree. If graduate enrollments soar as more decide to stay in school, the newly minted master’s graduates may find the job market not all that much better in a couple of years than at the present, and end up taking a relatively low paid job — and facing much larger student loan debts than otherwise.
Moreover, the cost of getting a master’s degree varies a lot, depending on the school attended, the availability of financial aid, the length of the master’s program (ranging typically from one to two years), not to mention the “opportunity cost” in terms of employment income lost while in school. Some master’s programs will cost a student only perhaps $10,000, while others (e.g., an expensive two-year M.B.A. program) might run over $100,000.
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FROM 1 TO 25 OF 791 COMMENTS
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1. June 30, 2009
7:40 pm
Link
The new breed of M.S. degree, a Professional Science Masters shows promise of being the MBA of Science. A concept developed by the Sloan Foundation, these are multidisciplinary programs with interactions with industry built in. They bring the promise of new employees being ready to step into a position without taking 3 to 6 months to be trained. For more information go to http://www.sciencemasters.com. for more information.
— Diana
2. June 30, 2009
7:42 pm
Link
My MSW allowed me to practice independently and does offer me somewhat better pay than a BSW or BA working in the social work field. It also allowed me to move overseas as a “skilled migrant” when a BA degree would have not provided me that opportunity. As they said above it all depends on the field. Whatever happened to pursuing knowledge and personal development without worryig about money?
— Ambrose
3. June 30, 2009
7:49 pm
Link
I think that learning another language and spending time in another culture is much more educational and enriching and inclusive and expansive than traditional Post Graduate work.
By immersion in another language and culture new possibilities open up that were not otherwise available. An international perspective is very empowering in these tremulous times, and lends itself to a peaceful debate rather than violent conflict.
It’s a lot cheaper, it is custom, and the results are life-long. Win, win, win, win. Consider the alternative…
— Jim Box
4. June 30, 2009
7:55 pm
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I just finished my M.A. in the humanities, and am unable to find work teaching at a community college (which is what I had planned to do with this degree). Luckily I had a full fellowship, so I don’t have any loans to pay, but I’m back to where I was before I went to graduate school: jobless, broke, and wondering why I didn’t study business administration.
— Serapli
5. June 30, 2009
7:57 pm
Link
The pundits seem to agree that an MBA or a master’s degree in engineering is worth the investment in terms of increased earnings, while a humanities MA probably is not (though some allow as how it may offer inestimable, albeit intangible, benefits).
They seem to omit a large number of degree programs from their analyses. Elementary and secondary school teachers often must do postgraduate work in order to make their teaching certificates permanent, and get a bit more pay once they have done so. Social workers and counselors become eligible for licensure only if they earn master’s degrees. Increasingly, the master’s degree is the accepted credential for physical and occupational therapists as well. These and other degrees qualify people for membership in what are sometimes called the minor professions (as opposed to law and medicine). Are they not worth pursuing? Or are they just off the radar for this particular collection of humanities and business types?
— Stephen
6. June 30, 2009
9:41 pm
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I couldn’t believe some of the anecdotes I have heard from students. Since student loans have become so widely available, there has been no limit to the imagination of universities in making up new degree programs. This has been a cynical exploitation of naive young people. I can’t believe there are so many master’s programs in public policy or international relations. I read a report of a college student coming out of a kentucky university with a master’s in international relations. A no name public school has no business misleading students and essentially defrauding them for personal gain. This student came out of her master’s program with 80,000 dollars total in educational debt and of course can’t get a job. The problem with these watered down master’s degrees, that require no more than a good college term paper as a master’s thesis, is that they devalue the degree and lead to denigration of all degree holders in soft subjects. All these master’s programs and new academic departments have sprung up in response to student loans being given to anyone with a pulse. Universities should be ashamed of themselves. Most in academia know that it is unethical to allow students to deceive themselves as to future job prospects with worthless master’s degrees from no name programs. However, when their jobs depend on maintaining a certain quota of students for a particular program of study, even previously ethical academic types have compromised their ethics in their chase to be recipients of all that loan money.
— billy bob
7. June 30, 2009
9:46 pm
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The only reason that a hospital based recreation “therapist” is now a four year college degree instead of an apprentice program or one year community college program, is because universities have realized they can stretch out these one and two year certification programs into four year degrees and get four years of student loan money instead of just one. This is just one of many examples where short study certificate based programs have mushroomed into four year degrees as a cynical attempt to increase revenue. After all, if the student loan money is flowing so freely why not turn a one year program into a four year degree? These universities should really be ashamed at what they have done.
— billy bob
8. June 30, 2009
10:18 pm
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The Master of Arts degree was intended to prepare scholars for the PHD. It involved an in depth study of the field, and more importantly, the pertinent issues in that field(e.i. what needs to be done) and to acquire knowledge and skills in how to viable research. As such,it is not a terminal degree—it’s academic limbo.
— Martin Camarata, Prof. Emeritus
9. June 30, 2009
10:23 pm
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In my experience an M.A. does not improve the career chances in most professions of the liberal arts. The qualifying degree is the Ph.D. Unless you love the field, do not even think of it. You must like knowledge for its own sake, may end up working for very little money, and still must be convinced that you are doing the right thing.
I agree with Professor Taylor’s assessment of the current state of higher education and have written more about it here:
http://brainmindinst.blogspot.com/2008/12/financial-crisis-higher-education.html
— Peter Melzer
10. June 30, 2009
10:52 pm
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I hold an ASIE, a BS Technology-Business, and an MBA.
They are worth nothing.
The real value to me has nearly always been the knowlege that came along with the process of getting the degrees. Adding fuel to this position, over the years I’ve often come in contact with degree-holders, and with people having years of experience, who apparently learned nothing from formal education nor from experience.
I’m not a particularly brilliant sort, but I have always quietly enjoyed having a broader view of a more understandable world. Knowlege also brings on the even surer knowlege that I don’t know much at all. In fact, because of my education and experience, I am now sure that I know next to nothing, and that’s a humbling thought.
Rick
— Rick Chumsae
11. June 30, 2009
11:41 pm
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One way to look at the expense and work that goes into a graduate degree is that it is an investment in yourself. Taylor is correct that the most interesting degrees are not always the most practical. However, I would warn anyone considering a challenging program that you will need to be very interested in what you are studying to complete a master’s degree. My job is normally performed by people with a master’s degree. This expectation is partly because of degree inflation, which, like grade inflation at undergraduate institutions, is real. Six weeks ago, I graduated from Georgetown’s Master of Science in Foreign Service (MSFS) program. The non-economic value of my degree is amazing. For financial reasons, I worked half-time during my studies to avoid the opportunity cost of not working altogether. I agree with Vedder’s claim that not all degrees are created equal, that’s why I chose MSFS. I suppose I’m betting society will value what Trachtenberg would call my “documented competency” in international affairs.
— David Higgins
12. June 30, 2009
11:51 pm
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A Master’s Degree is probably a much lesser education than it once was, and the whole program to some extent has become commoditized, which contradicts the very principle of advanced learning. My observation doing an MS program back in the 80’s was that fully 60 per cent of the working adult attendees were purely and solely present to get a ticket-punch on their resume. There was no curiousity about anything except whether items would be on the exam or would earn credit.
In addition, those courses that did touch on business theories all seemed to be absolutely certain that there was no purpose for business except to make money, solely and entirely. This fixation was passed around like an exalted truth, rather than a toxic misestimation. There is no question about the necessity of making money of course, but whether it is sufficient is highly debatable.
It is not surprising that the meaning and weight of the sheepskin has declined under these conditions.
— AHJ
13. July 1, 2009
12:06 am
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Most students currently enrolled in university should not be there. They have no interest in higher education and seek only a ticket to a higher-paying job. They belong in vocational school, which unfortunately means that universities are turning into glorified job-training facilities.
And that, really, is what afflicts contemporary colleges and universities. They are obsessed not with educating their students but with preparing them for the job market. They have abdicated their vital role as centers of scholarship and conduits of civilization so that they can perform the same functions as vocational schools.
If the value of a university degree is measured only in the additional income it will generate for the holder, then it’s a waste of time. Undergraduate degrees are losing their status because they indicate nothing for certain about the degree-holders, not even basic skills in reading and mathematics — and certainly not knowledge of history, literature, languages, economics, science, or philosophy. Thus, students race fruitlessly to obtain more and more graduate degrees, which in their turn will be devalued.
If universities are to recover, they must abandon vocational training and rediscover their mission of real education. If some students don’t like that or can’t do the work, then they should attend schools more appropriate to their interests.
— N.S. Palmer
14. July 1, 2009
12:09 am
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We are saddling our kids with huge, insurmountable student loans for watered-down degrees at diploma mills. And then people wonder why we’re losing the race to the Chinas, Indians, Brazils, Russias, Canadas.
— Bleak Future
15. July 1, 2009
12:11 am
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Mr. Taylor stated: “The next bubble to burst will be the education bubble. Make no mistake about it, education is big business and, like other big businesses, it is in big trouble.”
And Mr. Taylor, higher education as provided by the private not-for-profits is a really big business of really rich universities that basically are getting a free ride on the taxpayers federally, state and locally. Why should these big businesses, and as you noted, these are businesses, not charities, be treated as though they are charities. Some of their administrators and professors make million dollar plus salaries and perks. Unlike other businesses, they also get tax free endowments of hundreds of millions of dollars.
It is time these elitist freeloaders pay their fair share of taxes like every other business in the US.
I also think the US should place restrictions on teaching foreign students advanced graduate studies in sensitive fields that can provide military and industrial advantages to our military adversaries and countries that compete with us in the global economy and which take jobs away from Americans. These fields include physics, chemistry and materials sciences, mathematics, engineering, medical research, computer and software design, etc. The US trained a number of the Japanese before WWII who later developed Japanese offensive weapons that were used to attack Pearl Harbor. We also taught the Japanese business management techniques that were later used against us to destroy many of our major industries or sharply reduce US company market share in the US.
— LetsBfairUSA
16. July 1, 2009
12:17 am
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Is the investment worth the return? Depends on the individual. Someone with an MA in TOEFL can become Dean at a community college, or make enough money tax free abroad to pay a student loan in a year. The commentaries above seem “market-based” and limited
“Not a Slam Dunk: Master’s Degrees.” Funny.
— John McDonald
17. July 1, 2009
12:24 am
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Interesting to me that several of the contributors mentioned “degree inflation.” If our society’s current push for everyone to go to college only results in the goal posts being moved, then the whole thing feels like a kind of scam. I think we need to take the skilled trades more seriously as options for intelligent people – emphasize their connection to science and math knowledge, and once again make these respectable paths that can be taken with pride.
Using bachelors degrees for gate-keeping into some entry level white collar jobs is unnecessary when the cost of getting the degree is so high, and, honestly, the skills needed for these jobs should be attainable by high school grads.
I say it’s time to take back the high school diploma and make it mean something again. We need to stop pressuring everyone to fork over all of their money to colleges and universities unquestioningly! The honesty of the professors above is truly refreshing!!!
— SE
18. July 1, 2009
12:26 am
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I do have to wonder at this comment by Trachtenberg when he says “Does earning an M.A. (distinguishable from an M.B.A. or other professional degree) ”
An MBA is NOT a professional degree. The degrees classed as graduate professional degrees are soley JDs and MDs and VMDs. And an MBA from a no-name cow-college isn’t worth the cost of the books in the labor market.
Now as to the topic at hand, some fields do require a Masters. Social Work comes to mind as a field that requires a Masters even for ebtry level jobs. Ditto psychology. Teaching even in the elementary through secondary level requires a Masters to advance.
The problem is whether the MA (or MS) is worth the cost. taking the $8000 a year cited above as the income difference, that would work out to be a net of about $5600 a year. If a 2 year MA costs $70,000, it will take close to 13 years to pay it off not including interest.
Entry in to other fields needs a masters in order to narrow the specialization and be marketable. For example, urban planning is such an area.
On the other hand an MFA (fine arts) is a time and money pit.
Soeaking as some who holds a MA in addition to a professional doctorate, a master’s program should be approached with caution. The costs are so high these days. (And if Vedder thinks that a student can do an MA for only $10,000, I guess he assumes the student will not eat and will live in a tent or under a bridge!) If the future earnings are not substantially enhanced by having the MA, it is probably not worth it.
Once again the prospective student needs to contact the placement office and ask the following:
(1) How many graduates from the Master’s prorgam obtain a job in the field
(2) How long does it take for them to find a job
(3) How much do they make starting out
(4) How do the initial earnings of the master’s grads compare with the intial earnings of the departments BA grads who work in that field
On the other hand, if one has money to burn, education is never wasted.
— AnnA
19. July 1, 2009
12:27 am
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As noted in a few of the articles, this question applies only to liberal arts and the like. For engineering, you want and need an M.S. or Ph.D.
— michael
20. July 1, 2009
12:28 am
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Earning my MA was among the most fruitful and most rewarding experiences I’ve had, even more so than working on the PhD. Certainly it is a stepping stone of sorts, a way to make sure you would like to pursue something to a higher level (or not). The MA is a chance to delve seriously into a topic or to realize you can’t wait to finish with it and do something else. As with anything, an MA can be as rewarding and fulfilling as one makes it. I personally wouldn’t trade my MA experience—the people I have met and worked with, and the lasting friendships—for anything (including the few grand it cost!). Money spent on education is an investment in one’s life that lasts forever and can’t ever be lost in the mysterious workings of the “market” or stolen in a Ponzi scheme. Besides, most MA programs offer scholarships and teaching assistantships that cover most if not all the costs.
— Joseph Powell
21. July 1, 2009
12:30 am
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Too bad most of the remarks about the “worth” of a master’s degree are about the dollar value. I feel they miss the truth, at least the truth of my life with my master’s. I’ve had mine for almost 40 years, and its worth to me has been the enhanced intellectual and cultural advantages it has conferred. My B.A. was spent among students mostly interested in football, beer, sex, and for the academic side–credentialing. My M.A. introduced me to peers fascinated by advanced study, in love with learning, thoughtful, articulate, cultured, and polite. As a result, the “worth” of my M.A. has been the enhanced, engaged quality of my life.
— Boomerscoutofamerica
22. July 1, 2009
12:33 am
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As a student completing my M.A. in American Studies, this debate is one that is often on my mind. I am looking to graduation this fall and applying for jobs, but I find that most organizations are much more interested in my internship experiences than my academic background.
But in the end, I value my graduate studies despite their lack of financial or possibly even professional benefits. I attended a prestigious, private university for my undergraduate degree, but my graduate work at my state university is what has ultimately cemented and deepened all of my previous learning. Not everyone has the luxury of completing a degree that doesn’t necessarily lead to more money, but I’m grateful for it.
— Perry, Kansas City
23. July 1, 2009
12:40 am
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Quoting Mr. Vedder:”That said, however, that is not true for everyone. Not all degrees are equal — a master’s in anthropology or art probably has less incremental earning
There may be some truth to this statement, but I have to disagree that a M.F.A. in art is the same as an MA in the humanities. MFA is a terminal degree and can open doors teaching at the university level.
All these “experts” also failed to note that an advanced degree plays an important role if graduates want to work abroad. Many countries have a point system when awarding visas and education is a significant category. In this global economy, it’s not uncommon that many people now face the prospect of working over seas.
I agree that taking on tons of more debt is probably not the best approach to furthering your education but with a little effort and research you can find options or funding opportunities to help invest in your future.
I think it is also important that students have a little perspective before they just “jump” into a masters program. Often we see students just roll from a Bachelor’s into a graduate program with little or no real world experience. Just a year or two out in the world does wonders in the focus and desire it takes to pursue a higher degree. Too many students wander into a masters program with little or no direction not to mention the energy or appreciation needed to finish.
Jobs may come and go, but an education is something that will always be part of you. If a student spends wisely and takes full advantage of the time, a degree no matter what discipline will always pay off. Our society needs to reinvest in education and allow more students the opportunity to pursue higher degrees with programs, grants and sponsorships to make it happen. Having a population that is too educated is a problem I think we would rather have than the opposite.
— david donar
24. July 1, 2009
12:41 am
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Lest we forget – and in this bottom-line oriented society it is difficult to forget – education is not all about fiscal payback. As a recipient of 3 degrees (AB, PhD, JD) I found that each separate level gave me more appreciation of the world in general, more ability to enjoy whatever I could make of the ratrace of existence, a better appreciation of the whole complexity of life. At 75 I am still striving to learn more, not facts but things about life and how to understand them.
— joconnor
25. July 1, 2009
12:49 am
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MAs for liberal arts degrees, I agree, are worthless in all but a few cases. Anyone that wants to actually specialise in their area of practice requires a MA or even PhD in order to even think about getting their foot in the door. Myself included. I work as a humaniatrian aid worker. Although there are those who have joined the field without even a bachelors degree, where I started out (London), you cannot even access internships without at least a MA. Maybe the pay does not match what you have spent on your education, nor does the experience (I found my undergraduate degree, completed in Montreal, more diverse and challenging – the MA was more of a social networking tool). However, in fields such as development or humanitarian relief… it’s a necessary evil and i don’t think that is going to change.
June 30, 2009, 7:30 PM
What Is a Master’s Degree Worth?
By THE EDITORS
(Credit: Chip East/Reuters)
Room for Debate recently published two forums on the burdens of student loans, and heard from a lot of former students, parents, professors and others who shared personal horror stories, blunt advice and critical observations about higher education.
A number of economists and education researchers say that the student debt problem, while real, has been overblown by the press and loan-forgiveness advocates, and that most students do not graduate with too much debt.
RESOURCES
Will Higher Education Be the Next Bubble to Burst?
A Lifetime of Student Debt? Not Likely
Is a College Degree Worthless?
The Great College Hoax
But the debate presents difficult questions for young people, who face the most difficult economy since the Great Depression. Many have decided to go to graduate school, to wait out the storm. Several commenters on our forums even said they had no choice but to seek a master’s degree (and incur more debt), arguing that a B.A. today is the equivalent of having a high school diploma 20 years ago and more employers require a higher degree.
How do students know if an M.A. is worth it or not? What degrees might be worth getting, and which are not? How does a student weigh the risks and benefits of taking that intermediate step in higher education?
Mark C. Taylor, Columbia University professor
Stephen Joel Trachtenberg, former university president
Liz Pulliam Weston, personal finance columnist
Richard Vedder, Ohio University economist
The Education Bubble
Mark C. Taylor, the chairman of the religion department at Columbia University, is the author, most recently, of the forthcoming “Field Notes From Elsewhere: Reflections on Dying and Living.”
The next bubble to burst will be the education bubble. Make no mistake about it, education is big business and, like other big businesses, it is in big trouble. What people outside the education bubble don’t realize and people inside won’t admit is that many colleges and universities are in the same position that major banks and financial institutions are: their assets (endowments down 30-40 percent this year) are plummeting, their liabilities (debts) are growing, most of their costs are fixed and rising, and their income (return on investments, support from government and private donations, etc.) is falling.
Colleges are on the prowl for new sources of income. And one place they invariably turn is to new customers, i.e., students.
This is hardly a prescription for financial success. Faced with this situation, colleges and universities are on the prowl for new sources of income. And one place they invariably turn is to new customers, i.e., students.
During times of financial stress, people become vulnerable and understandably seek to improve their situation in any way they can. For many, more education seems to be the solution. When the economy goes down, applications to graduate programs go up.
As a lifelong educator, I believe more education is always a good thing, but buyers must beware. The debt crisis is not limited to governments and universities but extends to students and their families. Far too many students come out of college with substantial debts that plague them for years.
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And now the economy makes matters worse. Only 19 percent of the class of 2009 had jobs at graduation. Furthermore, many recent graduates who are young professionals and had been working for a few years have been fired. They find themselves surfing the web looking for jobs, all while worrying about health benefits and repaying their student loans.
This situation has many young people asking whether it makes sense to go back to school to pick up a master’s degree. There is no easy answer to this question and every case is different. When facing this decision, it is important to consider exactly what you need and how the degree will help you.
Some graduate degree programs can be very helpful for certain careers but many are not. And, remember, what is most interesting is not always most practical. Be sure you consider your motives and goals carefully. Do not simply assume that another degree after your name is going to open doors.
I have had too many students over the years who have gotten masters and even doctorates find themselves in debt big time, unemployed and forced to start all over in their mid-30s. If you do find a program that will enhance your prospects for a job and better life, then before your enroll, you need to figure out how you are going to pay for it and, if you must borrow more money, whether you can really afford to take on additional debt. You are going to have to do this by yourself because you cannot rely on people with vested interests in increasing enrollments to give you reliable advice.
One of the dirty secrets of many research universities is that they treat master’s students as cash cows that fund other activities. To make matters worse, with many faculty members uninterested in teaching, students cannot assume they will get what they are paying for.
Bottom line — and much of this is about the bottom line — consider your needs carefully, research your options thoroughly, don’t believe everything you read or hear and invest your time and money prudently.
The Value of an M.A.
Stephen Joel Trachtenberg is president emeritus and professor of public services at the George Washington University. He is also chairman of the Higher Education Practice at Korn Ferry International.
The M.A. degree is neither fish nor fowl nor good red meat. I had a classmate at Columbia who remained on after receiving his B.A. degree to earn an M.A. degree on a fellowship while waiting for his fiancé to graduate from Barnard. Another classmate who started a Ph.D. program was informed after a year that he had no real promise but if he went away quietly they would give him a booby-prize: the M.A. He became an M.D.
What’s so bad about reading a lot of French literature at someone else’s expense?
Does earning an M.A. (distinguishable from an M.B.A. or other professional degree) make any sense from a cost-benefit point of view? It does allow one to upgrade one’s alma mater. If you originally matriculated at a college you are vaguely uneasy about, taking an M.A. at a more elite institution allows you to kick down and kiss up, henceforth letting you tell people you “went to school” in New Haven. And it does, of course, ornament a resume indicating academic sitzfleisch — the ability to keep your behind in a chair in a diligent manner. A “B” undergraduate can become an “A” graduate student.
The M.A. permits someone who has a generic B.A. degree in a field she didn’t much care about to change direction, to add a line to her curriculum vitae that says she has a documented competency. M.A.’s also allow their owners to check the right box on corporate personnel forms and similar documents used by the armed services, N.G.O.’s, schools and public agencies that like their civil servants credentialed.
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Degrees That Don’t Pay Off
Liz Pulliam Weston is the author of “Easy Money,” “Your Credit Score” and “Deal with Your Debt.” She is a personal finance columnist for MSN Money.
Graduate school has traditionally been a great place to wait out recessions while honing your skills for a better job. But sometimes, the payoff doesn’t justify the cost.
When I analyzed economic costs and benefits of various degrees several years ago for an MSN column, “Is your degree worth $1 million or worthless?”, it was clear that certain degrees were winners:
–People with associates’ degrees tended to earn a lot more than those whose educations stopped at high school.
–Bachelor’s degrees, particularly those earned at lower-cost public universities, also tended to be worth the investment.
–Professional degrees in law or medicine were costly to get but clearly offered a big enough payoff.
Not such a slam dunk: Master’s degrees.
In some fields, such as business or engineering, a graduate degree typically boosted income by more than enough to justify the cost. In others — the liberal arts and social sciences, in particular — master’s degrees didn’t appear to produce much if any earnings advantage. The Census Bureau has updated the data I used a few times since then, and the results are similar: certain graduate degrees just don’t seem to pay off.
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Not All Degrees Are Equal
Richard Vedder is director of the Center of College Affordability and Productivity and teaches economics at Ohio University.
Given the poor labor market, should new college graduates go on and get a master’s degree? For many students, this is not a bad option. Census Bureau data show us that typically young adults with master’s degrees earn about $8,000 more a year (roughly, 15 percent) than those just having a bachelor’s diploma. The lifetime earnings gains for the second degree should reach into the low six digits. For many, the rate of return on the added college investment therefore should be reasonably high — and it beats unemployment or working in a low-skilled, low-wage retail trade job.
Universities should survey former students for five years after graduation, and give that information to prospective students.
That said, however, that is not true for everyone. Not all degrees are equal — a master’s in anthropology or art probably has less incremental earning power than a M.B.A. or advanced engineering degree. If graduate enrollments soar as more decide to stay in school, the newly minted master’s graduates may find the job market not all that much better in a couple of years than at the present, and end up taking a relatively low paid job — and facing much larger student loan debts than otherwise.
Moreover, the cost of getting a master’s degree varies a lot, depending on the school attended, the availability of financial aid, the length of the master’s program (ranging typically from one to two years), not to mention the “opportunity cost” in terms of employment income lost while in school. Some master’s programs will cost a student only perhaps $10,000, while others (e.g., an expensive two-year M.B.A. program) might run over $100,000.
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FROM 1 TO 25 OF 791 COMMENTS
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1. June 30, 2009
7:40 pm
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The new breed of M.S. degree, a Professional Science Masters shows promise of being the MBA of Science. A concept developed by the Sloan Foundation, these are multidisciplinary programs with interactions with industry built in. They bring the promise of new employees being ready to step into a position without taking 3 to 6 months to be trained. For more information go to http://www.sciencemasters.com. for more information.
— Diana
2. June 30, 2009
7:42 pm
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My MSW allowed me to practice independently and does offer me somewhat better pay than a BSW or BA working in the social work field. It also allowed me to move overseas as a “skilled migrant” when a BA degree would have not provided me that opportunity. As they said above it all depends on the field. Whatever happened to pursuing knowledge and personal development without worryig about money?
— Ambrose
3. June 30, 2009
7:49 pm
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I think that learning another language and spending time in another culture is much more educational and enriching and inclusive and expansive than traditional Post Graduate work.
By immersion in another language and culture new possibilities open up that were not otherwise available. An international perspective is very empowering in these tremulous times, and lends itself to a peaceful debate rather than violent conflict.
It’s a lot cheaper, it is custom, and the results are life-long. Win, win, win, win. Consider the alternative…
— Jim Box
4. June 30, 2009
7:55 pm
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I just finished my M.A. in the humanities, and am unable to find work teaching at a community college (which is what I had planned to do with this degree). Luckily I had a full fellowship, so I don’t have any loans to pay, but I’m back to where I was before I went to graduate school: jobless, broke, and wondering why I didn’t study business administration.
— Serapli
5. June 30, 2009
7:57 pm
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The pundits seem to agree that an MBA or a master’s degree in engineering is worth the investment in terms of increased earnings, while a humanities MA probably is not (though some allow as how it may offer inestimable, albeit intangible, benefits).
They seem to omit a large number of degree programs from their analyses. Elementary and secondary school teachers often must do postgraduate work in order to make their teaching certificates permanent, and get a bit more pay once they have done so. Social workers and counselors become eligible for licensure only if they earn master’s degrees. Increasingly, the master’s degree is the accepted credential for physical and occupational therapists as well. These and other degrees qualify people for membership in what are sometimes called the minor professions (as opposed to law and medicine). Are they not worth pursuing? Or are they just off the radar for this particular collection of humanities and business types?
— Stephen
6. June 30, 2009
9:41 pm
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I couldn’t believe some of the anecdotes I have heard from students. Since student loans have become so widely available, there has been no limit to the imagination of universities in making up new degree programs. This has been a cynical exploitation of naive young people. I can’t believe there are so many master’s programs in public policy or international relations. I read a report of a college student coming out of a kentucky university with a master’s in international relations. A no name public school has no business misleading students and essentially defrauding them for personal gain. This student came out of her master’s program with 80,000 dollars total in educational debt and of course can’t get a job. The problem with these watered down master’s degrees, that require no more than a good college term paper as a master’s thesis, is that they devalue the degree and lead to denigration of all degree holders in soft subjects. All these master’s programs and new academic departments have sprung up in response to student loans being given to anyone with a pulse. Universities should be ashamed of themselves. Most in academia know that it is unethical to allow students to deceive themselves as to future job prospects with worthless master’s degrees from no name programs. However, when their jobs depend on maintaining a certain quota of students for a particular program of study, even previously ethical academic types have compromised their ethics in their chase to be recipients of all that loan money.
— billy bob
7. June 30, 2009
9:46 pm
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The only reason that a hospital based recreation “therapist” is now a four year college degree instead of an apprentice program or one year community college program, is because universities have realized they can stretch out these one and two year certification programs into four year degrees and get four years of student loan money instead of just one. This is just one of many examples where short study certificate based programs have mushroomed into four year degrees as a cynical attempt to increase revenue. After all, if the student loan money is flowing so freely why not turn a one year program into a four year degree? These universities should really be ashamed at what they have done.
— billy bob
8. June 30, 2009
10:18 pm
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The Master of Arts degree was intended to prepare scholars for the PHD. It involved an in depth study of the field, and more importantly, the pertinent issues in that field(e.i. what needs to be done) and to acquire knowledge and skills in how to viable research. As such,it is not a terminal degree—it’s academic limbo.
— Martin Camarata, Prof. Emeritus
9. June 30, 2009
10:23 pm
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In my experience an M.A. does not improve the career chances in most professions of the liberal arts. The qualifying degree is the Ph.D. Unless you love the field, do not even think of it. You must like knowledge for its own sake, may end up working for very little money, and still must be convinced that you are doing the right thing.
I agree with Professor Taylor’s assessment of the current state of higher education and have written more about it here:
http://brainmindinst.blogspot.com/2008/12/financial-crisis-higher-education.html
— Peter Melzer
10. June 30, 2009
10:52 pm
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I hold an ASIE, a BS Technology-Business, and an MBA.
They are worth nothing.
The real value to me has nearly always been the knowlege that came along with the process of getting the degrees. Adding fuel to this position, over the years I’ve often come in contact with degree-holders, and with people having years of experience, who apparently learned nothing from formal education nor from experience.
I’m not a particularly brilliant sort, but I have always quietly enjoyed having a broader view of a more understandable world. Knowlege also brings on the even surer knowlege that I don’t know much at all. In fact, because of my education and experience, I am now sure that I know next to nothing, and that’s a humbling thought.
Rick
— Rick Chumsae
11. June 30, 2009
11:41 pm
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One way to look at the expense and work that goes into a graduate degree is that it is an investment in yourself. Taylor is correct that the most interesting degrees are not always the most practical. However, I would warn anyone considering a challenging program that you will need to be very interested in what you are studying to complete a master’s degree. My job is normally performed by people with a master’s degree. This expectation is partly because of degree inflation, which, like grade inflation at undergraduate institutions, is real. Six weeks ago, I graduated from Georgetown’s Master of Science in Foreign Service (MSFS) program. The non-economic value of my degree is amazing. For financial reasons, I worked half-time during my studies to avoid the opportunity cost of not working altogether. I agree with Vedder’s claim that not all degrees are created equal, that’s why I chose MSFS. I suppose I’m betting society will value what Trachtenberg would call my “documented competency” in international affairs.
— David Higgins
12. June 30, 2009
11:51 pm
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A Master’s Degree is probably a much lesser education than it once was, and the whole program to some extent has become commoditized, which contradicts the very principle of advanced learning. My observation doing an MS program back in the 80’s was that fully 60 per cent of the working adult attendees were purely and solely present to get a ticket-punch on their resume. There was no curiousity about anything except whether items would be on the exam or would earn credit.
In addition, those courses that did touch on business theories all seemed to be absolutely certain that there was no purpose for business except to make money, solely and entirely. This fixation was passed around like an exalted truth, rather than a toxic misestimation. There is no question about the necessity of making money of course, but whether it is sufficient is highly debatable.
It is not surprising that the meaning and weight of the sheepskin has declined under these conditions.
— AHJ
13. July 1, 2009
12:06 am
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Most students currently enrolled in university should not be there. They have no interest in higher education and seek only a ticket to a higher-paying job. They belong in vocational school, which unfortunately means that universities are turning into glorified job-training facilities.
And that, really, is what afflicts contemporary colleges and universities. They are obsessed not with educating their students but with preparing them for the job market. They have abdicated their vital role as centers of scholarship and conduits of civilization so that they can perform the same functions as vocational schools.
If the value of a university degree is measured only in the additional income it will generate for the holder, then it’s a waste of time. Undergraduate degrees are losing their status because they indicate nothing for certain about the degree-holders, not even basic skills in reading and mathematics — and certainly not knowledge of history, literature, languages, economics, science, or philosophy. Thus, students race fruitlessly to obtain more and more graduate degrees, which in their turn will be devalued.
If universities are to recover, they must abandon vocational training and rediscover their mission of real education. If some students don’t like that or can’t do the work, then they should attend schools more appropriate to their interests.
— N.S. Palmer
14. July 1, 2009
12:09 am
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We are saddling our kids with huge, insurmountable student loans for watered-down degrees at diploma mills. And then people wonder why we’re losing the race to the Chinas, Indians, Brazils, Russias, Canadas.
— Bleak Future
15. July 1, 2009
12:11 am
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Mr. Taylor stated: “The next bubble to burst will be the education bubble. Make no mistake about it, education is big business and, like other big businesses, it is in big trouble.”
And Mr. Taylor, higher education as provided by the private not-for-profits is a really big business of really rich universities that basically are getting a free ride on the taxpayers federally, state and locally. Why should these big businesses, and as you noted, these are businesses, not charities, be treated as though they are charities. Some of their administrators and professors make million dollar plus salaries and perks. Unlike other businesses, they also get tax free endowments of hundreds of millions of dollars.
It is time these elitist freeloaders pay their fair share of taxes like every other business in the US.
I also think the US should place restrictions on teaching foreign students advanced graduate studies in sensitive fields that can provide military and industrial advantages to our military adversaries and countries that compete with us in the global economy and which take jobs away from Americans. These fields include physics, chemistry and materials sciences, mathematics, engineering, medical research, computer and software design, etc. The US trained a number of the Japanese before WWII who later developed Japanese offensive weapons that were used to attack Pearl Harbor. We also taught the Japanese business management techniques that were later used against us to destroy many of our major industries or sharply reduce US company market share in the US.
— LetsBfairUSA
16. July 1, 2009
12:17 am
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Is the investment worth the return? Depends on the individual. Someone with an MA in TOEFL can become Dean at a community college, or make enough money tax free abroad to pay a student loan in a year. The commentaries above seem “market-based” and limited
“Not a Slam Dunk: Master’s Degrees.” Funny.
— John McDonald
17. July 1, 2009
12:24 am
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Interesting to me that several of the contributors mentioned “degree inflation.” If our society’s current push for everyone to go to college only results in the goal posts being moved, then the whole thing feels like a kind of scam. I think we need to take the skilled trades more seriously as options for intelligent people – emphasize their connection to science and math knowledge, and once again make these respectable paths that can be taken with pride.
Using bachelors degrees for gate-keeping into some entry level white collar jobs is unnecessary when the cost of getting the degree is so high, and, honestly, the skills needed for these jobs should be attainable by high school grads.
I say it’s time to take back the high school diploma and make it mean something again. We need to stop pressuring everyone to fork over all of their money to colleges and universities unquestioningly! The honesty of the professors above is truly refreshing!!!
— SE
18. July 1, 2009
12:26 am
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I do have to wonder at this comment by Trachtenberg when he says “Does earning an M.A. (distinguishable from an M.B.A. or other professional degree) ”
An MBA is NOT a professional degree. The degrees classed as graduate professional degrees are soley JDs and MDs and VMDs. And an MBA from a no-name cow-college isn’t worth the cost of the books in the labor market.
Now as to the topic at hand, some fields do require a Masters. Social Work comes to mind as a field that requires a Masters even for ebtry level jobs. Ditto psychology. Teaching even in the elementary through secondary level requires a Masters to advance.
The problem is whether the MA (or MS) is worth the cost. taking the $8000 a year cited above as the income difference, that would work out to be a net of about $5600 a year. If a 2 year MA costs $70,000, it will take close to 13 years to pay it off not including interest.
Entry in to other fields needs a masters in order to narrow the specialization and be marketable. For example, urban planning is such an area.
On the other hand an MFA (fine arts) is a time and money pit.
Soeaking as some who holds a MA in addition to a professional doctorate, a master’s program should be approached with caution. The costs are so high these days. (And if Vedder thinks that a student can do an MA for only $10,000, I guess he assumes the student will not eat and will live in a tent or under a bridge!) If the future earnings are not substantially enhanced by having the MA, it is probably not worth it.
Once again the prospective student needs to contact the placement office and ask the following:
(1) How many graduates from the Master’s prorgam obtain a job in the field
(2) How long does it take for them to find a job
(3) How much do they make starting out
(4) How do the initial earnings of the master’s grads compare with the intial earnings of the departments BA grads who work in that field
On the other hand, if one has money to burn, education is never wasted.
— AnnA
19. July 1, 2009
12:27 am
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As noted in a few of the articles, this question applies only to liberal arts and the like. For engineering, you want and need an M.S. or Ph.D.
— michael
20. July 1, 2009
12:28 am
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Earning my MA was among the most fruitful and most rewarding experiences I’ve had, even more so than working on the PhD. Certainly it is a stepping stone of sorts, a way to make sure you would like to pursue something to a higher level (or not). The MA is a chance to delve seriously into a topic or to realize you can’t wait to finish with it and do something else. As with anything, an MA can be as rewarding and fulfilling as one makes it. I personally wouldn’t trade my MA experience—the people I have met and worked with, and the lasting friendships—for anything (including the few grand it cost!). Money spent on education is an investment in one’s life that lasts forever and can’t ever be lost in the mysterious workings of the “market” or stolen in a Ponzi scheme. Besides, most MA programs offer scholarships and teaching assistantships that cover most if not all the costs.
— Joseph Powell
21. July 1, 2009
12:30 am
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Too bad most of the remarks about the “worth” of a master’s degree are about the dollar value. I feel they miss the truth, at least the truth of my life with my master’s. I’ve had mine for almost 40 years, and its worth to me has been the enhanced intellectual and cultural advantages it has conferred. My B.A. was spent among students mostly interested in football, beer, sex, and for the academic side–credentialing. My M.A. introduced me to peers fascinated by advanced study, in love with learning, thoughtful, articulate, cultured, and polite. As a result, the “worth” of my M.A. has been the enhanced, engaged quality of my life.
— Boomerscoutofamerica
22. July 1, 2009
12:33 am
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As a student completing my M.A. in American Studies, this debate is one that is often on my mind. I am looking to graduation this fall and applying for jobs, but I find that most organizations are much more interested in my internship experiences than my academic background.
But in the end, I value my graduate studies despite their lack of financial or possibly even professional benefits. I attended a prestigious, private university for my undergraduate degree, but my graduate work at my state university is what has ultimately cemented and deepened all of my previous learning. Not everyone has the luxury of completing a degree that doesn’t necessarily lead to more money, but I’m grateful for it.
— Perry, Kansas City
23. July 1, 2009
12:40 am
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Quoting Mr. Vedder:”That said, however, that is not true for everyone. Not all degrees are equal — a master’s in anthropology or art probably has less incremental earning
There may be some truth to this statement, but I have to disagree that a M.F.A. in art is the same as an MA in the humanities. MFA is a terminal degree and can open doors teaching at the university level.
All these “experts” also failed to note that an advanced degree plays an important role if graduates want to work abroad. Many countries have a point system when awarding visas and education is a significant category. In this global economy, it’s not uncommon that many people now face the prospect of working over seas.
I agree that taking on tons of more debt is probably not the best approach to furthering your education but with a little effort and research you can find options or funding opportunities to help invest in your future.
I think it is also important that students have a little perspective before they just “jump” into a masters program. Often we see students just roll from a Bachelor’s into a graduate program with little or no real world experience. Just a year or two out in the world does wonders in the focus and desire it takes to pursue a higher degree. Too many students wander into a masters program with little or no direction not to mention the energy or appreciation needed to finish.
Jobs may come and go, but an education is something that will always be part of you. If a student spends wisely and takes full advantage of the time, a degree no matter what discipline will always pay off. Our society needs to reinvest in education and allow more students the opportunity to pursue higher degrees with programs, grants and sponsorships to make it happen. Having a population that is too educated is a problem I think we would rather have than the opposite.
— david donar
24. July 1, 2009
12:41 am
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Lest we forget – and in this bottom-line oriented society it is difficult to forget – education is not all about fiscal payback. As a recipient of 3 degrees (AB, PhD, JD) I found that each separate level gave me more appreciation of the world in general, more ability to enjoy whatever I could make of the ratrace of existence, a better appreciation of the whole complexity of life. At 75 I am still striving to learn more, not facts but things about life and how to understand them.
— joconnor
25. July 1, 2009
12:49 am
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MAs for liberal arts degrees, I agree, are worthless in all but a few cases. Anyone that wants to actually specialise in their area of practice requires a MA or even PhD in order to even think about getting their foot in the door. Myself included. I work as a humaniatrian aid worker. Although there are those who have joined the field without even a bachelors degree, where I started out (London), you cannot even access internships without at least a MA. Maybe the pay does not match what you have spent on your education, nor does the experience (I found my undergraduate degree, completed in Montreal, more diverse and challenging – the MA was more of a social networking tool). However, in fields such as development or humanitarian relief… it’s a necessary evil and i don’t think that is going to change.
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