The Education Bubble, Thiel, and what needs to change

We're in an education bubble, and Thiel wants to deflate it.

I'd posted a little while back about unaccredited institutions and the education bubble.

This bubble has existed for some time, with online institutions getting billions in federally subsidized student loans. Recently, the well-known entrepreneur Peter Thiel also posited that we're in an 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.”

[Housing and education] 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.

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...

Thiel organized a $2M challenge and has selected 20 promising students to recieve $100,000 apiece to stop out of school, to be mentored and end up with awesome results ("stop out" means they have the option of returning).

Thiel is trying to prove a point, but his point is muddied by a lack of rigor. These stop-outs already have distinguished records, so I'm guessin most of them will do pretty well outside of school (although it seems like half of them already have college degrees). If Thiel wants to make a rigorous point instead of generating buzz around his idea, he should set up a control group, by finding 40 "winners" and randomly selecting 20 of those to stop-out. Better yet, if he really wants to prove college is overrated for everyone, they should pick 1000 random students from US schools (not just top ones), then mentor 500 of them. A few years (decades) later, compare the groups.

The benefits of college

Let's re-evaluate why college seems important to people. Americans are taught from birth by families and the federal government that they should go to college. College becomes an end in itself. It used to be the case that having a degree at all meant you were one of the few who put yourself through by sheer will and determination, or at least your parents were well-enough off to send you to school.

Now, we're facing huge numbers of enrollments, as students are taking out record levels of student-loan debt. School is no longer as much of a flag that you're employable, because everyone has a college degree, and many of them are not good hires. The result is already becoming clear: people who study non-scientific subjects are not paid especially well. To make matters worse, the US Department of Education encourages student apathy about college major by providing testimonials from inexperienced students:

"There is no reason to have to know what you want to do when you come to college. College is a place and time for you to explore all those avenues and opportunities."

Adam,
Kansas State University

"Your choice of major depends on your interests and what you'd like to do after college. For example, I'm really interested in helping people, so I chose psychology..."

"There is not really a 'best' major. Remember to choose one that's interesting and enjoyable to YOU, not one that your friends and family think is best. After all, YOU will be taking the classes and doing the work!"

More importantly, we still need people to fix our cars, take out the trash, paint and build houses, take care of our elderly, and install electrical systems. These are necessarily not bad jobs, even though they do not require a college degree. Sending more people than necessary to school just to go to school is bad for the economy, since it makes white-collar jobs underpaid and siphons money into educational institutions. I could even be convinced that it increases wages of those jobs that don't require a college degree, because those with a college degree don't want to do those jobs.

The traditional value of a college education

Traditionally, schools might be seen as "country clubs for the young". Wealthy parents sent their kids off to whichever private college is known to their peers, to network with other wealthy parents' kids. A reasonable amount of learning happens, but remember that these students are also reading Chaucer, Homer, and Nabokov to become "well-rounded" individuals. Public schools offer a similar service, but based a bit less on the exclusivity part.

The value of the school to the student is at least fourfold:

1. Information learned in the classroom.
2. It looks good on a resume.
3. Socialization. I learned how to live with roommates, for example, and I probably talk with a dialect more similar to the others at my undergraduate school than to my own brother.
4. Networking. I met several professors who had an influence on my future and were able to write letters of recommendation. Perhaps future jobs will take advantages of friends I met.

The only one of these that an any school can provide to an arbitrary level is (1), and that assumes no limit to the quality of the teachers. (2), (3), and (4) typically will only work out if the school ranks highly and, hence, is somewhat selective.

But these schools must be well-known (and not just selective) to be useful for (2)-(4). Consider the following schools, which are among the most-selective 20 in the U.S.:

1. Amherst
2. Cooper Union
3. College of the Ozarks
4. Annapolis (US Naval Academy)
5. Pomona College
   
6. Claremont McKenna

Of course I'm oblivious, but I only recently learned that Amherst is one of the most-selective, and I've only heard fleetingly of a few of the rest (perhaps this is because I am a non-liberal arts person). And yet these are extremely expensive. Tuition at Pomona, for example, is $38,394 per year. Tuition at Claremont McKenna? $38,510. Room and board is another $11,000 or so at these places.

Despite these tuitions, a resume coming from one of these schools would look no better to me than U. Virginia ($9,872 in-state and $31,872 out-of-state), which accepts more students but has a pretty good engineering school. And, unfortunately, the similarly named West Virginia State University is not even accredited, and, hence, useless as a school.

Are colleges doomed? I imagine we'll see a considerable shrinkage in the next decade, as employers become jaded with the quality of students. From my earlier post, I'll repeat the tips for college-seekers (note that checking the accreditation is also important for hiring managers):

Also, make sure the school you attend is a well-known school, that people will recognize. If you're staying local, a major state school or community college that people will recognize should be fine. If you're going national or abroad, try to pick a top-25 school. And, if you're hiring, be scrupulous about checking the accreditation of your newhires' schools.

I'll also add some new advice: study something that will get you a decent job. Check out the link above (re. pay in scientific subjects), for example.