Peter Thiel: We’re in a Higher Education Bubble
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Sure, if you're starting a web startup or a basketball team, no one cares where you went to school (although an offensive lineman in football benefits from going to a top tier school -- despite football being a meritocracy its surprisingly difficult to measure how effective linemen are). But the top lawyers, doctors, professors, and even business managers will be recruited from where people think the best people are.
The ironic thing is that the only reason people listen to Peter Thiel is because of his credentials as PayPal co-founder and VC investor. There are a million people have an opinion on education and tecnology. There's too much noise -- the ideas that are listened to are those that come from people who have done soemthing in the past -- a credential. At a massive scale college is still THE credential.
And surprisingly the internet has actually made elite schools more important, not less. Pre-internet regional schools were often held in near equal esteem as Harvard/Yale. As information became more fluid (USNWR and the internet) the ranking of credentials became easier to obtain. This won't change.
All a credential is is something you've done in the past which implies your ability to do something in the future.
Graduating with a degree in Econ from Harvard implies that you might be a good consultant for McKinsey. Founding Facebook implies you might be a good founder for a future effort. Having a great GitHub project implies you might be a good programmer for some simliar tasks.
There probably exists a spectrum of opinions on whether the credential is useful because of the vetting or the experience of the actual program. Candidly, I think that YC probably has a value add in attendance. Higher education? Not generally, no. I have a $140,000 degree (two, technically) which basically certifies that at 18 years old I was smart enough to get into my university and then, for the next four years, I did not die or fail to sign my loan docs. I know I learned some things of value in those four years, but I could just as easily have written myself a course of study with zero commercial potential, and my degree would say the same thing in a language 99.998% of Americans can't even read anyway. (East Asian Studies degree written in... Latin?!
The problem with higher ed is that if there is value add they make it impossible to know. Try to get outgoing metrics, besides grad rates, of outgoing undergrads and its near impossible. Professional schools do a better job of this.
For example, I'd love to see income distributions by university/major. The universities themselves cannot be trusted to provide it in any accurate fashion[1], but mining it from a large sample of graduates would be much better and less biased.
[1] http://www.nytimes.com/2011/01/09/business/09law.html?_r=1&#...
YC, TechStars, Thiel, etc. are awesome signals for those who achieve them just as Harvard, Stanford and MIT are but I think the real juice is in the alternatives for those who don't fall into the top 1% of 1% who simply wish to prove their knowledge and abilities without having to drop six figures in the process.
> However, it isn't unreasonable to see a situation in
> which follower counts on sites like Github, Dribbble,
> Quora, etc. do become scalable ways of signaling. They
> aren't perfect indicators of ability or knowledge but
> then again, neither are college degrees
Just have a look at the SO superstars -- none of them are auto-hires for all situations. You'd need to evaluate them individually and carefully. Presumably to a degree that makes their community rating superfluous.
The problem seems to be that "a Github account" only exists for software development. For almost every other field that college covers, there's no equivalent. And the vast majority of college students aren't CS majors.
That point is pretty high tho'. The thing is, that people who don't hire people usually don't understand, is that programming experience that organizations are interested in is only experience of programming to external requirements under external constraints, because that is what working programmers do, e.g. "write a program to do X on system Y by time Z", where none of those things are what you would have chosen yourself. Which is why it's a really bad idea to put on your CV that you've had 10 years experience when you're 21, the guy interviewing you has 10 years actual experience and he'll not be impressed.
If regional schools received such a blow, why did their tuitions radically increase right in line with the Ivies' increases?
Also in response to, "the reason why it's a bubble is also what keeps it afloat;" there is no quantification there--what would the tuition numbers have to be before this statement didn't apply? Will it key applying no matter what, even if there was an increase that put tuitions, say, beyond the lifetime earning capacity of the average college graduate?
But I agree with you that future online community reputations can improve the situation.
Otherwise, very interesting points. :)
You're probably right on Harvard-as-a-filter, but Thiel has seen this.
Let me start by saying that the standard of living has increased for everyone, but yet being poor still sucks. And it will continue to suck. Increasing you standard of living is no fun if everyone else's increases faster.
The reason you do things like college, YC, or even start a company, is generally to differentiate yourself with respect to standard of living (some people do this to make the world a better place, but those people are few enough that wlog we can ignore them).
You can't look at a system that is meant to create differentiations and then complain because it creates them. For better or worse, its doing what its meant to do. Even if you were to get rid of college altogether, you'd still have the issue persist. But now it would just shift to making into Thiel's Talented 20, or the Moritz 5, or YC, or TechStars -- each with a different level of repute (because at the end of the day, there is going to be differentiation between who is given nothing to start a company and those people that everyone wants to shove a million dollars in their pocket).
Unless we go to a socialist system, people will value metrics that differentiate people -- and ideally the differentiation should happen on someone else's dime. Today that dime is the student/parent/government. Maybe in the future it will be VCs, but trust me it will still happen as a VC as bright as Theil knows its not prudent to fund everyone at equal levels.
I'd argue people are going to school to get higher wages. Wages have stagnated for the last 20+ years. High cost university educations are offering little or no bargaining power to individuals. Just like buying an overpriced house you can't sell. It's a bubble.
Eventually people's awareness catches up with reality. And that's usually when the government tries to lower the cost of increasing the supply even more. But for some reason, people don't seem to fall for it twice.
So the search is on for new things to bubble-ize.
But perpetuating it is the real problem. Property rights are the cure, not socialism. Hernando de Soto states the case well:
http://en.wikipedia.org/wiki/Hernando_de_Soto_PolarI'm curious: how did you become non-poor and what were the factors that made it possible in your case (if you are willing to share that)?
I was one of six kids. We were always taught learning was important. We went to Catholic schools. We had nothing but always lived in a neighborhood where everybody worked. I think that is very important. Seeing cause and effect is very important.
But this is not unusual. Many people in the US have parents or grandparents who started with nothing.
Poverty is a cultural and political creation. Most people that desire to save and invest and are allowed to keep the results will work their way out of it. Those who are taught to consume and borrow or have the results of their efforts taken cannot.
I guess it all comes down to individiuals making opportunities within a system that is dysfunctional (to whatever degree).
Personally, I don't see it as socialism vs. capitalism but more of a self-interested bureaucracy vs. "good government" problem.
Just based on the earning and unemployment rates of college grads vs. high school grads, a college degree still makes a dramatic difference in your chances of employment.
Spoken like a person who's never seen real deprivation. In the 70's, many poor people didn't have a flush toilet. Pooping without walking into the backyard is fun, even if everyone else gets to do it too.
If your only concern with the poverty is that the bottom 5% is jealous of other people, you need to stop and simply accept mathematical reality. You can't eliminate the bottom 5%. But eliminating the class envy rhetoric might at least reduce feelings of jealousy among the poor.
When you've reached the point where this is the case, you're not really poor any more. For someone who is actually poor, increasing standard of living is good without regard to whether other people's increases more.
Federally guaranteed student loans.
[1] http://www.thebigmoney.com/articles/money-trail/2010/06/17/s...
Seems its evil for the non-unionized to make money in education. The unions and the overpaid civil servants that manage them can rake in as much as possible without federal resistance, even if the product is marginal. I wonder if that came up when the unionized PBS did their expose.
Money that flows from DC has a way of wrecking things.
College professors are tenured, not unionized. And considering that most schools hire adjunct professors and slash benefits to the bone, it's hard to argue that teachers are bleeding the system dry.
On the other hand, the school where I just got my Master's from just built a brand new 177,000 square foot rec center, complete with 3 story climbing wall. And we've proudly paid good money to bring the guy/girl who invented Zumba to teach a few Zumba sessions. On top of this, programs that bring recognition to "joe consumer" (college football, basketball, etc) want for not.
Also, much of PBS is not unionized. It's kind of hard to unionize organizations that rely on member donations to keep afloat.
Many are both. At Rutgers, everyone is represented by the AAUP. At NYU, the TAs are represented by the UAW.
(I'm not cherrypicking Rutgers/NYU, I just worked at both.)
At least in America they rarely go on strike. My undergrad institution in suburban Toronto was infamous for strike-related class cancellations.
I'm in complete agreement with your point about non-academic expenditures, though. There's a large 'four-year party' market out there, and the fight for those students' tuition dollars has led to an arms race in campus luxury spending.
A rule of thumbs for bubbles is each one must have a "why this time it's different" elevator pitch ("Dow 40,000', "there's only local housing markets").
Exclusivity likely is a large part of what gives an elite education its value, normally - a Harvard education has indeed generally been highly prized. But what keeps a bubble afloat is bubble dynamics. Even a valuable item can be over-valued. The self-validating quality of increasing prices and valuations really does works well for a while - like it did for all the other bubbles - and can then can be expected to stop working - like it did for all the other bubbles.
Prices for the highest quality houses rose and that tide also lifted housing prices in poor areas. But when the market crashed everything went down.
For profit colleges are selling garbage degrees to poor people in urban areas. Degree inflation has already begun and soon it will also effect people at some of the highest levels. Look at PhDs and JDs. Soon this paper inflation will suck real value away from the areas we haven't even thought of.
Low end non profit colleges do the same thing.
http://www.washingtonmonthly.com/college_guide/feature/colle...
This particular focus on for-profits is simply the work of a media campaign against them (by short sellers and non-profits afraid of cheaper competition).
For profit, on the other hand, I have no problem with capitalism but the incentives in the low-income-education market point pretty clearly to "crank out as many degrees as possible with more emphasis on marketing the degree than making it good". Butts in chairs and all that, if you want to make money.
EDIT: Although, I'd love to be proven wrong. Cheap vocational training where the school turns a profit would really be a great system. I'm just concerned that the priorities will have to be 1) attract lots of students, 2) cut costs per student, 3) deliver education, in that order, if your organization's goal is profit rather than education.
The organization's goal isn't all that relevant compared to the results produced by the folks actually doing the work. Heck, their goals matter more than the organization's goals.
For example, a non-profit can easily be staffed by folks looking to just slide by. Remember - they're being paid just like the folks at the for-profit down the street.
Non-profit is merely a tax and investor-return status. That tells you nothing about what the organization actually does.
Say you're writing the FY2012 budget right now for your moderately successful for-profit degree program. You have an extra 10k. Do you spend it on better lab equipment or on subway ads? Subway ads would seem to be the more profitable choice a lot of the time. Actually, while we're at it, if we have a choice between an excellent and a mediocre professor, why don't we take the mediocre guy for less money and spend the difference on marketing? That's a sound business decision, because it will lead to more profit.
Now, maybe your consumer market will be so discerning as to punish schools who make decisions like this in the long run, but I'm not convinced they will.. good marketing can beat a good product in many industries and especially in something as hazily defined as education. Doubly so when you have customers who just want "a degree", take a look at Western New England University sometime if you want to see the definition of a paper mill. Their entire degree program is cops getting their masters for the contracted pay bump.. the emphasis is very much not on learning.
Again, I'd love to be wrong.. but can you really not see these incentives at work here?
(This phenomenon also occurs at for-profit companies, but the profit motive of shareholders can sometimes reign it in, e.g. the Gordon Gekko investor. Sometimes it can't, as in the case of GM or MS.)
You're ignoring the incentives of the people involved.
Employee behavior is not determined by whether capital costs are being repaid from revenues.
Take your example, higher education. Do you really think that the money goes to the classroom?
Profit is at most 10% of revenues. Why do you assume that that 10% has more effect than the 90% that goes to expenses?
In fact, non-profits are notoriously lax wrt expenses. They often cost more to deliver the same services.
Which reminds me, why are you assuming that it's better to spend 2x as much on an "excellent" professor? Sure, it's great for the folks in her class, but what about the folks who don't get to take a class because you spent all your money on excellence?
Or, if you like, what about the folks who can't afford that class because you spent so much on the professor.
This fallacy (what I sometimes call the "non-profit fallacy") is certainly being exploited by the people looking to harm for-profits.
But make no mistake - it is a fallacy. Non-profits want money just as much as for-profits - the only difference is that the money is distributed as salaries to employees (particularly the bloated administrations) rather than as profits to shareholders.
Institutional incentives matter far more than the explicit corporate charter.
In another part of this thread, you essentially admit the point that for-profits are engaging in a massively fraud against the Federal government as selling garbage degrees.
So the problem with "harming" these shysters is what? That you don't want this to be specific to for-profit education institutions. Fair enough but any effort to "harm" this group would essentially involve reigning any college's ability to print federal government dollars. Is there a problem that rather pressing concern?
I suspect the majority of crappy schools are non-profits, simply because most colleges are non-profits. I strongly favor reigning in all crappy schools, I merely oppose limiting our efforts to for-profits.
It's entirely possible that low-end non profit colleges participate in similar bad behavior. But that in no way excuses it for the for-profit colleges.
As you say, non-profits engage in similar bad behavior. So why single out for-profits specifically? Why not just say "colleges are selling garbage degrees..."?
I wasn't trying to excuse anything. I just think prepending the word "for profit" in front of any criticism of low end colleges ignores half the problem and plays into a media narrative created by various vested interests (non-profits trying to eliminate the competition).
I'm a capitalist, but some of the practices of these schools are not defensible. High cost, high dropout rate, low placement.
As joe-the-user points out, this gives it value, and has nothing to do with whether it is currently over- or under-valued.
That million people haven't founded such significant ventures as PayPal is. That's why you call'em "a million", not by names.
Of course it's a bubble. It's the law and finance that sustains it. Inevitably, it will change, and the asians may have to pioneer it.
Even after adjusting for academic achievement students from top-tier university do better post-university, as this broadly tends to hold true across subjects. Of course this could be purely be down to signalling effect, but if so it would imply signalling has as strong impact across all industries not just a handful of professional ones.
But what if Harvard had enough capacity to admit everyone who met its admissions standards? It's a question worth asking. Would Harvard cease to be "Harvard" if that were the case? Thiel's point is that it would -- which is indicative of a problem with our valuation of Harvard.
Be that as it may, your overall point is sound. Harvard may have some mystique baked into its valuation, but most of us still hold the valuation -- mystique and all -- in high esteem. We accept it at face value. So long as we continue to do so, the bubble stays afloat.
In order to test Thiel's thesis, we'd have to go a step further and ask ourselves: what would, in theory, cause the bubble to pop? What would it take? Given that this bubble (for lack of a better word) has been propped up for hundreds of years, and is still going strong, what straw would break the camel's back?
I'd argue that it's Stanford. Or, rather, everything the proverbial Stanford represents: Silicon Valley, something approaching new-money meritocracy, and so forth. If enough Stanfords emerge across the world, suddenly the time-honored value of the Harvard degree seems less shiny than it once was.
[Interestingly enough, Harvard does a pretty darned good job at being a Stanford, too. But, for the set of Harvard attendees who are there to collect the credential and not to start up a company, the value of that credential-qua-credential would decrease in a bubble-deflating scenario].
...to which the rich bring weighted dice.
1) Seldom before in recent American history has it been easier for a well-qualified, but SES-disadvantaged student to gain admission to Harvard.
2) Seldom before in recent American history has it been harder for an SES-disadvantated student to become well-qualified to gain admission to Harvard.
Once you've reached the admissions gates, so to speak, your merit is a better calling card today than it ever has been. But getting there is becoming tougher and tougher, thanks to a chronically deteriorating public education system and increasingly costly college-preparatory mechanisms.
It is commonly assumed that the rich receive advantages at the gate. Rather, they've been receiving advantages throughout their lives that increase their likelihood of getting to the gate in the first place. It's a subtle, but important distinction.
What if the admission criteria is top n candidates? (not top n % of the candidates, mind you), which is very likely (and valid criteria for Top Schools, with legacy/brand to defend, limited/finite resources/talent pool, which would not scale lineary, IMO)
For what it's worth, as well, I'm pretty sure that your system is the one actually being used. I would imagine -- but do not know for certain -- that schools like Harvard try to keep class sizes relatively fixed. It's not that their policy is to admit n% of all applicants, but rather, that their policy is to admit n students, and the size of the pool feeding into n keeps going up. Indices, rankings, and people commonly report only the percentage. But the percentage is an output of the system and not an input.
However, if Harvard dropped its admissions criteria to that level, it'd be forced to take in several times as many students as it does. Consequently, you're not getting in with a 1250-1400 unless your parents are very well-established.
I don't think it's worth it for people to get bent out of shape about the difficulty of getting into elite colleges. It's just supply and demand. There's nothing personal about it, and the idea that bleary-eyed admissions officers making quick judgments at 7:45 pm after a string of 14-hour days can make meaningfully "holisitic" assessments of a person's character and future prospects for success, well... that's just laughable. Besides, an elite degree may have made a person set for life at one time, but that era ended a long time ago.
Demand and supply. If you flood the market with Harvard graduates their perceived value goes down. The same reason why limited editions exist.
Furthermore, actual Stanford isn't doing any damage to actual Harvard. The data I've found suggest that 70+ or 80+% of undergrads admitted to both Harvard and Stanford pick Harvard.
Sources: http://college.mychances.net/college/tools/college-cross-adm...
http://mathacle.blogspot.com/2008/06/harvard-yale-princeton-...
*I must use the "semi-" qualifier here because, as we all seem to agree, there's no such thing as a true meritocracy. The wealthy have advantages throughout life that maximize the chances of generating a meritorious CV.
The answer to the question is that what makes Harvard Harvard cannot be franchised. You can't franchise the interpersonal interaction with dozens of the highest quality professors and postdocs in the world. You can't franchise Cambridge and Harvard Square. You can't franchise the interaction with the other students.
To the extent that the education and experience can be imitated, they already are, at hundreds of Universities in the US and around the world.
But again, the whole question is a diversion. The core question is whether the higher education purchased by millions of students every year is worth the investment, not whether Harvard or any of a select few Ivy League schools is worth it.
What changed in the second half of the 20th century is that academia became (for students and professors) a national, rather than a regional, market. Now every top high school student vies for an Ivy League slot, and there just aren't enough of them to accommodate all the great students, especially when there's an implicit contract between the Ivy League and the WASP old-board that about half of the slots are going to go to entitled aristocrats based on privilege rather than merit.
The national market actually makes the process a lot noisier, not a more efficient informational market.
The internet didn't create the national market. That began in the 1960s (air travel, television) if not earlier. The Internet just sped the process along by making it a lot easier for people to send out 20+ applications and clog up the system. The job market has the same problem. It's not flow of information that's the problem. It's, for lack of a better word, spam: content without information.
You know how selective tech companies brag about their 1:250 acceptance rates? For an even moderately qualified applicant, odds are closer to 1:15 to 1:4. Companies get a ridiculous number of spam CVs-- often in duplicate or triplicate, because many of the worst recruiters are prolific spammers, and because the least-qualified applicants send out so many CVs. On this note, be very careful about using recruiters and make sure they won't send out your CV without your consent; the worst recruiters not only throw CVs around promiscuously, but often "upgrade" details, meaning that a later (honest) CV submission may contradict one on file, make you seem a liar, and flush you out on that alone.
It's not fluidity of information that is the problem. In an efficient market for information, no one would give a shit about college prestige in the first place because the (smarter and harder-working) 85th-percentile state-school graduate would beat the 65th-percentile Ivy graduate, hands down. College prestige only matters because people are often typecast to the average quality of a student from their school, at least as the starting assumption about a young person with a blank CV. The problem isn't "fluidity" of information but that personnel markets (job market, academic admissions) are clogged up with so much useless spam information that separating the signal from noise is nearly impossible.
You're implying he said credentials are worthless or meaningless.
He actually was saying that there's a bubble in education. That is, the cost of education is overvalued vs the return one typically gets. Yes, he talks about the exclusionary nature of institutions but I don't think his point is that credentialing is pointless. His point is that the system has built a bubble (overvalued not worthless)
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 costs $50K/year (http://www.admissions.ucla.edu/prospect/budget.htm). And that's a public school. And it's rising 8% a year. So the cost of learning has plummeted to almost nothing and yet 18-22 year old kids are taking out six figure loans to "learn". This makes no sense and feels very unsustainable.
And here's what I think will change the game: alternative signaling and credentialing mechanisms. When universities no longer have a monopoly (or near-monopoly) on signaling/credentialing we'll witness a sea change. I'd offer that this is already starting to happen in certain parts of industry. Would you rather hire an engineer with a lot of GitHub followers, a great reputation on Stack Overflow and/or someone who is a Y Combinator alum or would you rather higher a Stanford or MIT grad? It's a bit of a toss-up for many people to answer that and given that the comparison is Stanford/MIT and not the 4,000 "lesser" schools, that says something.
This change won't happen overnight but Thiel is on the money here. Higher ed is a $500 billion industry in the U.S. alone and I think its value proposition has never been more questionable than it is today.
(~$500 billion/365/24/60 = ~$1 million/minute)
This knowledge hasn't been locked up for decades, though. It's been possible since at least the mid-20th-century to self-teach yourself the standard material in any major field, at least at an undergraduate level, by going to a library and reading, from the introductory textbooks up through the advanced ones. There are some things that might be hard to replicate (e.g. getting hands-on chemistry lab experience), but you could certainly self-teach the equivalent of a 4-year program in mathematics or history or theoretical physics.
A few people even did. In mathematics it's not that uncommon to find self-taught people, though it still isn't the norm. But overall not many people do it. Why will people do so now? Just because the material can be accessed without going to a library? Given that it takes some effort to work your way through a 4-year physics program, was the effort of going to the library to pick up Griffiths/Feynman/Landau really the main bottleneck?
I can definitely buy some change on the margins and in poorer countries (people who had no access to a library), but I'm confused why the internet will mean that people who for decades have not been teaching themselves physics, despite the books being available, will now do so.
So I definitely think the ability to self-educate has been there for a long time (you could make the case that dates all the way back to the advent of the printing press) but I think it's only in the last decade or so that we've had an explosion in the amount of high-quality, free and widely accesible educational material that is available.
He notes (p.94) that many companies tried to use the Internet to reshape the textbook industry, by supplying more content. But, he says, the job most students are really trying to get done "is pass their courses without having to read the textbook at all". These companies were trying to help students do something that they were trying not to do. He imagines a hypothetical "cram.com" would be more successful.
Most people (not all) find self-study extraordinarily hard - how many things have you, dear reader, set out to study but not completed? I think the only ones I have managed are when I'm using a textbook to help me achieve something specific - write some code, build a business, solve some problem. I wonder, is this really "study" or just "use of references"? e.g. Looking a word up in a dictionary is not really "study", to comprehensively master a topic.
It would be incredibly disruptive if someone found a way to make study - giving useful skills - enjoyable and easy. Gameplay seems the most favourable. I don't just mean things like SO-style badges, but like physical sports (games) teach motor-skills, eye-hand coordination, teamplay and strategy. It's like the "purpose" of play is learning. Note that even animals play (e.g. dogs and wolves have a "play bow", that indicates what follows in not a genuine attack).
But only some of the time! Lots of things at undergraduate level are irrelevant to your ability to contribute to society
"When the Thiel Foundation came to a local startup incubator to pitch, it came under heavy fire. For one, a lot of their recruiting heavily targeted existing Ivy League/MIT/Caltech students. These were students who were going to do great regardless of whether or not they pursued traditional college paths.
In other words, if this is an attack on the traditional college path, Thiel's definitely sided with their filtering mechanisms.
One guy who was present said the following: "You guys denied admission to the program from the one candidate who was actually making money as an entrepreneur!"
Then they sack you with six figures of non-dischargeable debt and you're back living with your parents sending out resumes.
I don't think a "bubble" is the appropriate term, I think "exploitation" is better. The value that universities provide (either as learning environments or signalling systems) is nowhere near commensurate with their costs to young people. Young people have no idea though: they don't know the performance of the university in terms of enhancing graduates' incomes nor what a reasonable level of education debt is. And universities are completely negligent (and in some cases outright deceptive) in providing this info to incoming students.
Education debt WILL be made dischargeable in bankruptcy again, there is simply too much pressure (edu debt is larger than credit card debt). When it does, you can expect tuition rates to plummet, back in line to their real net present values. In my opinion this could not happen soon enough.
The university comes from an era that never really existed of large, stable corporations providing steady employment to "educated" worker bees. The university was the 0-cost-to-employer filtering system to ensure Big Co highers the best people. That model simply doesnt make sense anymore.
I'm not sure if that's possible - isn't essentially every graduate bankrupt? Couldn't every student get rid of their debts then?
Having said that, his statement "If Harvard were really the best education, if it makes that much of a difference, why not franchise it so more people can attend" misses the point entirely. Sure, Harvard probably has above average education. However, the reason it's sought after is because of the perception that all your peers at Harvard will be extremely smart talented individuals. As a society, we're hoping that that by putting all these really smart kids together in the "Harvard environment", they'll go on create things that they wouldn't have been able to on their own.
The point I'm trying to make is that the exclusivity of Harvard isn't "an excuse to do something mean", but rather an effort to create conditions where our smartest youngsters can get together and really change the world. I do, of course, agree that there are many other ways of achieving this goal than just college education.
What happens when two bubbles collide?
A bigger "POP"?
Entry-level investment banking compensation is pretty low on an hourly basis-- definitely lower than entry-level technology. IBD is about the only six-figure job available out of college, but it's awful when you consider the nature of the work and most people leave the industry within a year, not capitalizing at all on the "exit options"
Where by "change the world" you mean "continue to see that the Haves remain the Haves." You are correct to identity gathering a critical mass of best and brightest as a key part of the Harvard/Stanford "best of the best" puzzle, but the goal isn't to improve what they do, it's to introduce them to each other so that in 20 years they can sit on each others boards and amicably divide up the spoils of the markets they control. Quite a few students think the way you do, but the parents and especially the board members don't.
http://www.oftwominds.com/blogapril11/consumer-devolution-tw...
But every student knows that there are areas that lead to high-paying jobs such as engineering, while in other areas such as history, communications, philosophy, languages, you will have trouble finding a job, not even speaking of a high-paying job. Still, people are usually more or less aware of the fact that they might end up having an average-income job.
In the US, higher education is a financial investment where people expect a financial return. In Germany, higher education is mostly an investment of time and people are much more aware of the possible outcomes. We don't have a bubble here.
Given that the number of people with college degrees has been increasing steadily by age group in Germany, and that someone is paying for it, i.e. the state, i.e. the taxpayer, I don't see that "bubble" is an inappropriate word.
Germany probably has less of a higher education bubble than any other Western country though, because they have the best apprenticeship and vocational training system in the world. I believe this is only stable because Germany is enormously class and status conscious, and as a result has early streaming. I don't doubt that some potential is wasted, but probably the fact that Hauptschüler are not hindering the eductaion of Realschüler and Gymnasien would justify the system by itself.
http://features.blogs.fortune.cnn.com/2011/04/06/chris-whitt...
The article highlights some really interesting and shocking facts about private K-12 education (i.e. Harvard's 2010 acceptance rate was 6.9%, while acceptance to NYC's top private schools combined was 5.0%; Harvard's 2010-11 tuition was $34,976 and Horace Mann's tuition was $35,670).
http://fortunefeatures.files.wordpress.com/2011/04/avenues_s...
What will disrupt higher education in entirety is a properly done asynchronous class-schedule structure that allows students to take the time they need to finish the course. Coupled with some or full location independence and mandatory collaboration, it could be drastically more economical.
college is just another victim of this. no one wants to tell a parent that their new born child is ugly and no one wants to live in a world where we can't all hope to be anything.
the housing bubble was the result of parents telling their kids to buy homes, because that's the american dream.
if education is a bubble, if housing is a bubble, then the american dream might just be a bubble too.
maybe it's time we invent a new dream.
a long while a go we dreamed of working less. i feel like in a creative economy, one where the generation of creative ideas is of principal, maybe we need more time to be creative and to share.
i think largely as a whole we are at peak capitalism. capitalism seems to best fit when resources are expansive. i feel like in the next 20 years resources will be less scarce than in the previous 20, and that is a strong signal that we no longer need to focus on exploration and expansion as much as we do living within our means.
It's not just that everyone has access. It's also that bubbles create huge numbers of over-valued objects. If these for-profit colleges were cranking out well-trained software engineers we'd see a rise in overall real value (there'd be more technical co-founders available). Instead they're charging students 25k for online classes in degrees that society has no demand for. The same way pyramid schemes sell you junk to sell to your friends. You end up with a bunch of junk you can't sell. The degrees provide little or no real value to the workforce, and they're not even a filter anymore. That's what's really wrong with them.
Particularly true in education. Consider a hypothetical scenario where a law is passed that all CS curriculums across the nation have to be synchronized. Could you take the curriculum from MIT or CMU and simply drop it on Podunk U unchanged? Probably not. The only way to provide access is actually to lower standards.
Yes, the three words that define the last 10 years (in this context) are: exceptional, entitled, and special. Many people are merely average.
The devaluation of vo-tech schools also contributes to the bubble. Much of the CS technical skill training (like configuring a router, network planning, etc) needs to moved to vocational technical schools. You don't need a 4-year masters degree (nor the student debt) to do basic design and troubleshooting.
Right now, there is no company that can give you for $600 the same education that a state school provides for $100,000. But such companies are coming. Khan Academy already is as good as any school in helping people learn. All that's missing is certification: comprehensive exams given in secure environments like normal standardized tests (SAT, ACT, LSAT, GMAT, ...) Compared to teaching, certification is easy.
The real big bubble in education is at the lower levels, at the elementary, middle, and high school level where schools are even more fungible than at the college level. Kids don't attend a middle school for the prestige. They go to learn. The bubble for the teacher unions will pop when states begin to ask why the state should pay union-level salaries for teachers to lecture when students actually do better with just a laptop and an internet connection.
I believe my only gripe with the article is Thiel says you should not judge Harvard-caliber students if they went to Harvard or not, because we just don't have enough Harvard affiliates. But that's very hypocritical thinking for a venture capitalist, whose community resonates the same sentiment of judging YC-caliber companies when there aren't enough YC-affiliates (cause if that was the case, TechStars and other funds would hold the same esteem).
You can look at the bubble from the vantage point of the schools that are competing to keep up with the spending of the ivys and have overextended themselves: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a...
And you can also look at it from the perspective of the students that are emerging from mid or low tier institutions with a hefty chunk of debt relative to their likely earning potential.
Peter's (or Sarah's) focus on the Harvard kids seems to be the least compelling part of a potential education bubble. These are smart kids who either leave school with no debt in the case that they are poor to lower middle class, and with parental support (of the monetary kind) if they're on the other side of the wealth spectrum. So maybe they're "wasting" four years where they could be creating a business, but they're not in dire straights upon graduation or necessarily compelled to sell their souls. Check out Harvard's financial aid policies: http://www.admissions.college.harvard.edu/financial_aid/hfai...
I do think there needs to be some different paths put before kids in general as they contemplate "college as the only option" but I don't think Thiel is quite right to target the ivy kids as they have the least reason to fear an education bubble bursting -- because of the lasting [perceived] quality of their degree, their lack of debt in a lot of cases, their campus-born connections to smart and wealthy classmates and alums, and their smarts.
Yes, I'm being snarky. I'm open to his opinion but I also missing where he's qualified to make a more informed opinion.
The real bubble is groupthink.
“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."
Housing bubble - people have a right to own a home, regardless of financial merit. Education bubble - people have a right to a college education, regardless of academic or financial merit.
Housing bubble - massive federal infusion of cash that drove short-term costs artificially low, spiking sales prices while putting people in large, long-term debt for something they don't necessarily need (ownership - people do need housing). Education bubble - massive federal infusion of cash that drives short-term costs of education artificially low (student loans), while putting people in large, long-term debt for something they don't necessarily need.
Common theme - long term infusion of federal cash into markets leads to profiteering at the expense of the average American citizen. (What should we expect for health care?) In particular, the artificial reduction of interest rates allows sellers to charge higher prices for the same services. The services provider collects more money. The purchaser pays the same (or potentially more if their interest rate is not fixed).
Also, and economics, duh, artificially low costs lead to artificially high demand, which without any sort of quality control, looks an awful lot like a bubble.
It's a superficial story about Peter Thiel and Founders Fund framed as a controversial argument about the value of higher education. It really doesn't do anything more than pose the questions and include a few quotes from Peter Thiel.
Techcrunch trolls the internet once again.
I think this situation is a result of the financial crash; Thiel is right, people have fled to something they see as a safe investment to increase their personal worth. People are going (back) to university so they have the qualitifications they need to get a job that would have previously required very little in the way of formal education. The market is flooded with educated job-seekers, so people must now set themselves apart with something else.
At least in the USA the main reason why college is not free is that the major debate in congress occurred during the years after Vietnam Veterans returned and US congress people had a cultural bias towards giving those returning from Vietnam and those who did not fight in Vietnam a 'free college education' and like all political laws very hard to over-turn through a renewed debate..
But an English degree is not higher education, it is a fiction we created for those who want to go to college but can't hack it in the real world.
A STEM or a law degree will make you a lot of money.
Depending on your definition of "education", I agree with the first part of your statement. The second part of your statement I wholeheartedly disagree with. Education in general is a very valuable thing, but a classroom education is not the only one, and college can be valuable but is not necessarily so. I'm a high-school dropout, yet I've never regretted it for a second -- I have a good deal of education, but it comes from self-exploration and experimentation and it's shown itself to be quite valuable so far. My case is by no means the norm, but propping college up as the only path is pretty silly.
"college can be valuable but is not necessarily so"
You can always claim that "X can be valuable but is not necessarily so". Where X can be anything in this universe.
Second, you are trying to turn a personal experience into a generalization. A good question to ask would be what would happen If the college enrollment dropped by 10% or 20% or 50% ? How would this affect the workforce and the industrial output?
Another extremely important question is that how do you decide who exactly should drop out?? Should people drop out on basis of financial resources or some limited test of intelligence. The problem is that it is hard to tell who should enroll and who shouldn't.
While certain subjects can be learnt online, a large number of subjects cannot be learnt. A university provides Labs, Wide range of subjects, access to a social network of like minded people, Faculty, Assessment and most importantly some guarantee of Academic Integrity. Universities are an example of the Theory of the firm.[1] You can surely separate different components of college education which I mentioned above, however there will be significant transaction costs.
The underlying theme of this discussion is not about education or elitism. It is about allocation of capital. Peter Thiel being a Venture Capitalist is interested in allocation of capital, thus the whole 20 under 20. Dont confuse his efforts with education or elitism. If anything his program might be more elitist than Harvard.
If not, how do you know if you would have learned at lot there or nothing at all.
I can't blame you for dropping out of high school, but please don't tell me what college is or isn't if you have never gone to one.
It's like saying to martian geologist, have you been to mars? If not, how do you know what rocks are there at all?
No, but that person has parsed data from probes and knows what s/he is talking about.
It's like saying that while planning a moon mission for the first time. Have you gone to the far side of the moon?
No, but we will.
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The thing you're advocating is dogma. This person has lived through a lot of things and can offer a unique perspective based on his experiences and the data in front of him.
So, why should you not listen to him?