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The University Has No Clothes

The notion that a college degree is essentially worthless has become one of the year’s most fashionable ideas, with two prominent venture capitalists (Cornell ’89 and Stanford ’89, by the way) leading the charge.

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Pity the American parent! Already beleaguered by depleted 401(k)s and gutted real-estate values, Ponzi schemes and toxic paper, burst bubbles and bear markets, he is now being asked to contend with a new specter: that college, the perennial hope for the next generation, may not be worth the price of the sheepskin on which it prints its degrees.

As long as there have been colleges, there’s been an individualist, anti-college strain in American culture—an affinity for the bootstrap. But it is hard to think of a time when skepticism of the value of higher education has been more prominent than it is right now. Over the past several months, the same sharp and distressing arguments have been popping up in the Times, cable news, the blogosphere, even The Chronicle of Higher Education. The cost of college, as these arguments typically go, has grown far too high, the return far too uncertain, the education far too lax. The specter, it seems, has materialized.

It’s no surprise, given how the Great Recession has corroded public faith in other once-unassailable American institutions, that college should come in for a drubbing. But inevitability is just another word for opportunity, and the two most vocal critics are easy to identify and strikingly similar in entrepreneurial self-­image. In the past year or so, James Altucher, a New York–based venture capitalist and finance writer, has emerged through frequent media appearances as something of a poster boy, and his column “8 Alternatives to College” something of an essential text, for the anti-college crusade. The father of two young girls, Altucher has a very personal perspective on college: He doesn’t think he should pay for it. “What am I going to do?” he asked last March on Tech Ticker, a popular investment show on Yahoo. “When [my daughters are] 18 years old, just hand them $200,000 to go off and have a fun time for four years? Why would I want to do that?” To Altucher, higher education is nothing less than an institutionalized scam—college graduates hire only college graduates, creating a closed system that permits schools to charge exorbitant ­prices and forces students to take on crippling debt. “The cost of college in the past 30 years has gone up tenfold. Health care has only gone up sixfold, and inflation has only gone up threefold. Not only is it a scam, but the college presidents know it. That’s why they keep raising tuition.”

Like Altucher, Peter Thiel is a venture capitalist with strong misgivings about college. Unlike Altucher, he’s a billionaire and Silicon Valley royalty. In 1998, Thiel co-founded PayPal, and six years later, he made the first angel investment in Facebook. (In The Social Network, he is the imposing figure who conspires to oust Eduardo Saverin from the company.) A passionate libertarian—he was a generous supporter of Ron Paul in 2008 and is the main funder of the fringe Seasteading Institute, which aims to establish experimental political communities on offshore platforms—Thiel is deeply skeptical of top-down R&D and anything that smells like groupthink. At PayPal, he hustled $100 million in venture capital just ahead of the dot-com crash, which he anticipated, and he made another well-timed bet for his Clarium Capital Management hedge fund against the housing market in 2007. In higher education, he believes he has identified a third bubble, with all the hallmarks of a classic speculative frenzy—­hyperinflated prices, investments by ignorant consumers funded largely by debt, and widespread faith in increasing returns.

When I asked Altucher what his aim was in railing against college, he replied that he wanted to “reduce demand so costs go down”: Persuade enough kids not to enroll and colleges will be forced to change their ways. When I spoke to Thiel from his home in San Francisco in late February, he offered much the same justification for his major salvo in the fight against college—a philanthropic initiative called 20 Under 20. The program, also known as the Thiel Fellowship, will award twenty students 19 years old and younger $100,000 each and the mentor­ship of some of the most prominent entrepreneurs in Silicon Valley. The catch? The winners have to stay out of college for two years. They are to be announced this month.

Their advocacy has made Altucher and Thiel no few enemies. Jacob Weisberg, of Slate, has called the Thiel Fellowship a “nasty” and narcissistic idea that will retard the participants’ intellectual development and funnel whatever altruistic energies they have into getting rich, like Thiel. Altucher has received voluminous hate mail as the result of his media appearances and blog posts, including one from a fan who threatened to murder him and then eat his remains.


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