We've survived the tech bubble and the housing bubble, but according to Peter Thiel, one of the co-founders of PayPal, we're in the grips of a brand new bubble: higher education. Thiel, who is not a dropout—he attended Stanford for both his undergraduate and law degree—is challenging the idea that you need a degree to succeed in life through a new venture, his "20 Under 20" project. Instead of hiring graduates from the nation's most elite schools, he's paying 20 of them $100,000 to drop out of college, run with their entrepreneurial spirit, and start companies.
Thiel told TechCrunch that, "A true bubble is when something is over-valued and intensely believed," noting that, "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."
Part of Thiel's argument against higher education is that schools jack up their prices and limit the number of students they'll accept in order to foster an artificial exclusivity. That gives the impression that the education being received is more useful than it actually is. But if we really want an educated society, Thiel says, we'd lower the cost of school even further and replicate what the supposed best schools like Harvard are doing. Why doesn't that happen? According to Thiel,
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.
Thiel's point is that we shouldn't require college degrees—and ask students to go into such significant debt—for jobs that don't take advantage of that education. His solution is to burst the higher ed bubble by encouraging talented, smart students to drop out of school and try their hand at starting a company, and he's received 400 applications for his start-up experiment.
But ironically, Thiel's finalists are overwhelmingly students who attend the same elite universities he claims are part of the problem. These are students who got in to Harvard or CalTech or wherever by pursuing the same old bubble-inflating goals: getting good grades in AP classes and scoring well on standardized tests. By picking those students, Thiel's model actually buys into the idea that the exclusive institution is the valuable one. Moreover, with 400 applications and only 20 spots, his program is significantly more exclusive than Harvard.
But Thiel's program isn't just a little hypocritical, it's also irresponsible. As he must know, the romantic story of the dropout who makes it big is an exception. For every Bill Gates or Mark Zuckerberg, there are a thousand other students who've dropped out and are seriously struggling. Those students who don't make it in Thiel's experiment will probably head straight back to college, and they'll be fine. But other students who follow Thiel's advice, students who don't come from elite institutions and aren't getting $100,000, might find themselves in pretty bad shape if they drop out and don't end up winning the lottery in Silicon Valley.