Students get big payday for skipping school

A book, apple, and $100 dollar bills represents the costs of U.S. education.

Kai Ryssdal: We mentioned PayPal up at the top of the broadcast, and we're going to reference it again here. Peter Thiel was one of the co-founders of the bill-paying site. That makes him a billionaire, and something of an iconoclast.

Thiel thinks higher education in this country is overpriced and overvalued. I'm telling you this because, to prove his point, his foundation is paying 24 of our best young students $100,000 apiece not to go to college for two years and start businesses instead. The experiment -- not to mention the soaring cost of a college degree -- is creating a lot of debate in education circles, and among two of our reporters as well.

Amy Scott is our education correspondent. Steve Henn covers technology for us from Silicon Valley, land of the superstar college dropout. Guess who's on which side.


Steve Henn: Most of the fellows are pretty excited about this. I talked to John Burhnam. He's 18 and he's skipping his own high school graduation to get started. This summer, he's interning at MoonEx, which is a private space exploration company.

John Burhnam: There's an incredible amount for me to learn, and I'm swimming in an ocean of information. I feel like a kid in a candy store.

Burnham's sketching out a business plan to mine rare minerals from asteroids and the moon --

Amy Scott: Wait, what?

Henn: And then fly them back to earth.

Scott: Steve, this sounds a little crazy. This guy wants to drop out of college to mine the moon?

Henn: Basically, yeah. And you know, it might not work. But I think Thiel just wants to show that bright, motivated kids don't have to go to college. They can innovate or learn in other ways.

Scott: Sure, if someone pays you $100,000 not to go to college. But what happens to Space Boy when the money runs out and he's left without a college degree?

You know, Thiel isn't the only one worried about innovation in the economy. I called Judy Estrin. She a tech entrepreneur and just wrote the book, Closing the Innovation Gap. She says the Mark Zuckerbergs or Steve Jobs or Bill Gates of the world are one in a million.

Judy Estrin: It's like saying, I'm going to drop out and become a rock star. And how many musicians do you know that don't ever make it to be a rock star?

Plenty.

Henn: But there might be a rock star in this bunch -- these kids are incredible. And the kids I've talked to have said, if this doesn't work out in a year or two, they can always just go back to college.

Scott: Thiel wants lots of people to do this. That's the whole point. He's egging on this growing chorus of people wondering whether college is worth the money.

Henn: Yeah.

Scott: But for most people, it is. The typical person who just finished high school makes about $20,000 less a year than someone who went to college -- and is twice as likely to be unemployed.

Henn: But that's just because employers are fixated on college degrees.

Scott: Well they want college-educated workers. Listen to this guy. His name's Mike McPherson, he's an economist and former president of Macalester College.

Mike McPherson: I think there is really what I would call the strongest consensus among economists that you can find on any subject that college pays.

Henn: But it doesn't pay for everyone. You know Amy, you probably know these numbers better than I do. Right now, there are $1 trillion in student debt out there. And students whose educations don't pay off for them, can't just walk away or declare bankruptcy to get out from under it. And the costs of college tenfold since the '80s.

Scott: Yeah, but you are talking about the sticker price of college, which most people don't actually pay. Financial aid has been rising at the same time.

Henn: Still, something like one-third of all students who start a four-year college don't get a degree after six years. You know, I don't think college pays for them. This is still supposed to be the ticket to the American dream for everyone. You know I think Thiel just wants everyone to question that. Here, I'll let him speak for himself.

Peter Thiel: We no longer believe in housing; we no longer believe in technology. We have faith in very few institutions, but probably education is one thing we still have an almost manic or desperate belief that this is the ticket to the future, and that you should get an education no matter what the price. That makes it very dangerous.

Scott: OK, there's no question that debt is a huge problem, especially if you don't get a job right away, or a good-paying one. But you know, Steve, there still are lots of non-economic reasons to go to college.

Henn: Yeah, like keggers.

Scott: Well like learning, or college grads report bring happier. They're more satisfied with their jobs. They're more likely to vote. And you know, it may not be fair, but the truth is, in many ways, higher education is a ticket to success in our society.

Henn: But it shouldn't be the only ticket and it definitely shouldn't be this expensive.

Scott: Pretty good debate, Steve. You learn that at Wesleyan? And by the way, Peter Thiel went to Stanford.

Henn: Yeah, true.


Ryssdal: Amy Scott, Steve Henn. You can weigh in here and learn more about the fellows in Amy's and Steve's blog post.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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