Billionaire Peter Thiel recently announced at the TechCrunch Disrupt conference in San Francisco that he will award 20 people less than 20 years old cash grants of $100,000 to drop out of school.
The Thiel Foundation was created to help innovate the next generation of tech visionaires. He believes there is more value for the entrepreneur to launch a tech or scientific idea immediately that to wait the full four years of college or eight years of grad school. Is Thiel doing the irresponsible thing by telling kids to stop going to college or is his forward thinking the next big thing?
It’s often been debated if kids should be sent off to college to help them become successful in their life. With the changes in economy, I am beginning to think the idea of sending them off to college is becoming old fashion.
Scarcity of Jobs
I know the youth of today feels the weight on their shoulders. My 16-year-old son is out looking for a minimum wage job at the local theater and fast food joint but is told, “we’re not hiring right now.” I cannot remember a time it was difficult as a teen to obtain a job. It is concerning that my son and his friend’s constantly discuss what a challenging era they are growing up in (not just economical, but environmentally).
There is no doubt in one’s mind that getting a job is more difficult these days. The Bureau of Labor Statistics reports some states have a 14.4% unemployment rate (Aug 2010).
Some of the Hardest Hit States (11% and higher):
| Rank | State | Rate % |
|---|---|---|
| 51 | Nevada | 14.4 |
| 50 | Michigan | 13.1 |
| 49 | California | 12.4 |
| 48 | Rhode Island | 11.8 |
| 47 | Florida | 11.7 |
| 46 | South Carolina | 11.0 |
To help the unemployed cope, unemployment insurance is extended to 99 weeks for some hard hit areas.
Richest self-made Americans
And college doesn’t look so enticing when you see that these self-made billionaires dropped out of college to seek out their passions and succeed (Forbes 2003).
William H. Gates III (AKA: Bill Gates)
Harvard University, dropout
Net worth: $43 billion
Microsoft
Paul Allen
Washington State University, dropout
Net worth: $21 billion
Microsoft; Charter Communications
Larry Ellison
University of Illinois, dropout
Net worth: $15.2 billion
Oracle
Michael Dell
University of Texas Austin, dropout
Net worth: $11.2 billion
Dell
And here is the reason why Thiel and others alike believe entrepreneurs need to launch their technical and scientific innovations now:
“Because education seeks to impart past knowledge, when you are trying to create a technological breakthrough, you have to create new knowledge, and there is no way to teach that.”
They need to take their passion, drive, and self-taught knowledge to develop innovations. Bravo (I love that quote above, but it also explains why I can get so frustrated in the tech world – that’s why I love Google to find answers to my quandaries in a pool full of results).
Student Loan Debt
College students are being over consumed with student loan debts in their 20s. Parents facing their own money battles from the economic crisis cannot foot their child’s tuition bill. While college tuitions continue to rise, government scholarships and grants are dwindling. So, our children are taking on a blind faith that taking out large student loans will make for a worthy investment when they graduate (it makes me cringe when I hear of people carrying $100,000 worth of student loan debt).
We are making our children responsible young adults by putting them in debt? To struggle for survival? This is what we want for our kids? I don’t think so. And neither does Thiel.
Expand your thinking
There is a new movement taking place. A scarcity of jobs cause people to hustle ‘side jobs’ either because of the need to survive or to stashing away money to make ourselves financially responsible. Another reason is because we found we need to believe in ourselves – we are designing our own lifestyles – when we want to work, where we want to work. And the concept is working.
Technology is definitely expanding and designing our future, too. From computers, cell phones, to genomic sequencing machines – technology is a force that will drive the economy. Thiel’s program makes sense.
The Thiel foundation is awarding grants of $100,000 each to twenty participants for a two year program that will make them ultra-entrepreneurs. That is offering them a $50,000 salary or start-up money per year for these students to pursue their passion. This program will allow students to work on their ambitions before taking on the possibility of mass student loan debt.
ABOUT THE THIEL FOUNDATION
The Thiel Foundation defends and promotes freedom in all its dimensions: political, personal, and economic. The Thiel Foundation supports innovative scientific research and new technologies that empower people to improve their lives, champions organizations and individuals who expose human rights abuses and authoritarianism in all its guises, and encourages the exploration of new ideas and new spaces where people can be less reliant on government and where freedom can flourish. For more information, see ThielFoundation.org.
(photo credit: Accelerating Future)
Maybe (I am only partially convinced) we need to develop a new education model – one that emphasizes lifelong learning and gets away from the “batch processing” mode we are in now.
But an impediment to that model is our system of providing access to health care.
What 25 year old, or 25 year old, or 45 year old is going to take off a year from work to return to school when he or she needs to factor into the cost equation, the cost of health care.
We need a system that allows people to pay in while they are working, not just so they can have have coverage when they are sick and not working , but also to get them through periods when they are trying to enhance their contributions to society in other ways, like returning to school or starting a busness.
It is not just the education model that has failed us.
I agree with you, Jimmy. If universal health care takes place, then it seems possible to take the time to enhance our lives and contributions to society. In the meantime, there is COBRA, but I hear it it’s expensive.
They have great health care programs for children in our county for a very minimal fee dependant on income (I used to pay $7/mth and loved the doctors). It would be nice to have something like that in place – affordable to most people.
I went through university, myself, but the message of this post does touch me personally. I do feel we need to look beyond the paradigm of going to a bunch of school, then doing a bunch of work. It is very un-entrepreneurial. I commend Peter Thiel for looking outside of this traditional model and encouraging people to think outside the box and beyond these traditional paradigms. Then again, Peter has been called a “raving anarcho-capitalist” by some, so looking at things from a different perspective probably comes easily to him.
Nice post! I will be linking to this one for sure.
Thanks! Glad you liked the post.
I enjoy Peter’s view, too. And the “raving anarcho-capitalist” term, too.I was pondering on this post in the morning – there is a personal issue and that is the stigma placed on us to ‘go to college’. I have not finished my Bachelors (have a semester due) and am very successful in my field – I think the drive stemmed from needing to ‘prove’ it was not necessary to go to college to get where one needs to go. Anyhow…veering off topic. The stigma placed by society ‘places’ one in a lower class system by not finishing school. I feel it all the time in the biomedical field (especially when filled with doctors). Yet, in order to prove to society and obtain that degree…we claim thousands or hundred thousand in debt to go to school.
The model needs to change. So does the stigma. Think its possible? Or can all the non grads get honorary degrees like Steven Spielberg did after he proved his genius nature? 😉
For me, I have a bit of a different take on it…. I think going to college and getting higher education isn’t all about functionality or status…It’s about learning how to critically think, expand one’s mind, and be exposed to people and experiences one wouldn’t normally be exposed to without college…I went to community college (saving money) and then transferred to a 4 year top university and it was the best experience of my life and opened my world to one that I would have never been exposed to otherwise (coming from a small town). That being said, I also learned the hard way about studying something I wasn’t sure about and racking up a bunch of debt in a field that I no longer work in (got my Masters)… I wouldn’t recommend that… but the college experience…wouldn’t trade that for all the money or status in the world.
Hi Marina, Thank you for visiting and sharing your thoughts. That’s a great point of view! I agree with your aspect. Going to college can provide a valuable experience in opening up the senses to experience things one normally wouldn’t. Networking with peers and having a vast selection of educational resources is a nice commodity, too. Kudos to you for saving money in the beginning.
If my son does attend the University it is more for the social experience and general education. But after that (anything higher than a Bachelor’s), I am more willing to give him a down payment to invest in a business. He’s been talking about investing in a Subway.
Quitting college isn’t for everybody.
I had a great experience, and my major led me directly into my first job out of college.
Still, if you’ve got a great idea and think there’s a possibility of making it work, knock yourself out. It’s much easier to recover from a ‘mistake’ in your 20s than it is later in life.
Glad to hear you benefited from your education (especially when there are stats saying 50% don’t even work in the career they majored in ;))
And no one says you ‘can’t go back to school’ after the fact.
I just turned 20 and took a break from college from March of this year until now. I was mentally burnt out, having gone to school non-stop, including summer school just to get ahead, and it weighed on me. I love the tech industry, and definitely think it takes a large investment of time to be super successful in it. Just like Daniel said, quitting college isn’t for everybody. This isn’t a decision young people like myself should take lightly. Costs definitely play a role, especially since student loan debt is at an all time high. The allure of that amount of money to drop out of school (which some people rather have not gone to in the first place) is almost impossible to ignore. Great out of the box idea, but maybe a little too suggestive.
Nice thoughts, Briana. Glad to hear you went back to school. I know so many people that took that break indefinitely. But like many students in Europe, its normal practice to take a year off after HS to travel, then attend school. I like the sound of it.
But if this is a two year program, receiving a lot of experience form it, and get paid to attend (basically like an medical student interning) – along with the hodge podge of well known ‘professors’ who have been succesful in this business and have the know how – it might just be a priceless commodity to attend.
Loved the article and the scholarship idea.
Hey if one of these lucky 20 somethings didn’t end up being successful, I’m sure it’ll still be an incredible learning experience, great resume material and it doesn’t stop them from going back to college after the 2 year program is over.
😀 Agreed. Couldn’t have said it any better. I think it would be an absolutely astounding experience. I am very *envious* of those future entrepreneurs – wonder if I could pass for 19? I’ve been 19 for… quite a few years now. LOL.
I’d take the money! 🙂 My hubby went to culinary school, and while he did learn a lot of valuable things, it was also super expensive and he probably would have been just as successful without it 🙁
You live with a chef? Sweet! Ya, I think I would need to apply to this program and go with the startup $$, too.
Check out the The Raw Chef – he came out with ebooks, videos, a home study package and eZines. With your computer knowlege and his cooking skills – you could make that money back. 😉
We have all lived with the conventional wisdom that a degree is somehow insurance you’ll find some great job that will lead to six figures. It’s just not so.
I have always felt that people should not go into higher education to get a job. They should go into higher education to be educated. Our culture has entirely equated the purpose and success of higher education with earning power, and this is the wrong way to look at it. I would like to see the “go to college/get a job” equation broken so that education can be valued in its own right, not as a training school or entrance into the middle class, but for teaching an learning critical thinking. Education is valuable to life. People who do not value what education has to offer in itself should have another avenue for career training.
I do have to add, however, that the critical thinking skills developed in colleges and universities have value beyond the marketplace and there is a good reason to encourage young people to go. (I just wish we could be honest about what it is and not make it about the marketplace.)
In elementary and high school, learning tends to be about finding the right answer to questions. At the higher levels of education, shades of grey come into the picture. You are taught to think from many different perspectives, historical, philosophical, cross-cultural. This type of thinking is invaluable for understanding the world around us and making sense of big political questions. To have an informed populace able to think for itself, to listen to information and weigh its validity, is important to our national discourse. A “one right answer” way of looking at things is not good enough for a complex world.
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I think it’s a good idea only if those drop outs get a basic crash course in financial management. How many athletes who drop out of college to go pro end up bankrupt later on in life?
You can surely go through college without ever taking a course in financial management. A lot of college educated folks go bankrupt. As Ronald T. Wilcox pointed out in Whatever Happened to Thrift, those whose income doesn’t quite live up to their education level are most likely to have staggering household debt. They’re primed to think they’ll make a good living because they went to college, and they build up debt in anticipation of it.
In 1999, college freshmen predicted they would be earning, on average, $75,000 a year by the time they were 30. This was at a time when the average salary of a 30 year old was $27,000.
This cheerful generation of the “educated elite” ran up their credit cards in anticipation of their inflated salary expectations. In 2008, 84% of college undergrads had at least one credit card. The average balance of undergraduate credit cards was $3,173 and the average senior now graduates with $4,100 in debt. Fact fans.
Very interesting idea to do. But I like it because it is innovative and challenges the norm. I do think that the idea of college being the next step should not be the norm. Especially with the amount some students get into. With a anyone being in that much debt it will consume and worry them. That is something I would not want.