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Andrew P. Kelly

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Thiel's Dropout Deal Misses the Point

Posted: 05/27/11 04:44 PM ET

In this week's "not everyone should go to college" news, PayPal co-founder Peter Thiel made headlines when he announced the Thiel fellowship, a program which will pay talented high school graduates $100,000 "not to attend college." Instead, the incoming class of 24 Thiel fellows -- some of whom are drawn from institutions like MIT, Harvard, and Stanford -- will spend two years working on "business ideas" with more than 100 Silicon Valley mentors.

Thiel admits that this is about more than training the next generation of tech entrepreneurs. As the Chronicle of Higher Education points out, the fellowship aims to "[raise] big questions about the state of higher education." Thiel is one prominent voice in a growing chorus of observers who have likened higher education to "the next bubble" -- arguing that the bachelor's degree has become overvalued as a result of increases in cost and a seemingly irrational increase in demand, similar to the way the housing market looked before the crash.

Before people hijack the Thiel fellowship as a proof point that postsecondary education is not worth the investment, let's all take a deep breath. It sounds like a swell program. And I'm sure those 24 high-achievers will be well served by their time in Silicon Valley. I'm just not sure how it relates to the broader issues in higher education, especially the raging debate about whether college is a good investment for most students.

First off, let's call the Thiel fellowship what it is: an exceptionally lucrative apprenticeship that links candidates to a set of highly successful and engaged mentors. It's not just about paying students not to attend college. It sounds like the fellowship program will have a hefty dose of mentoring, and the students work with one another on their business ideas. In short, there is a lot of learning and training going on.

If the argument is that we need more high-quality apprenticeship programs, I'm all ears. Part of the reason the Thiel program sounds unique is that we suffer from a severe lack of formal apprenticeship opportunities for American high school graduates. At an AEI conference in February (Degrees of Difficulty, organized by Mark Schneider and myself), former Assistant Secretary of Education Diane Auer Jones argued that though apprenticeship programs exist in the U.S., they are woefully underdeveloped and underutilized, leaving students who would be well-suited for a formal apprenticeship with few options. The basic intuition behind the Thiel fellowship -- that on-the-job training from talented mentors builds human capital -- is one that we should institutionalize as part of the portfolio of higher education options, but not only for the budding engineers from MIT, Princeton and Stanford.

This brings me to the second point: are these really the types of students that the "bubblers" have in mind when they're talking about college as a bad investment? Or is it the broad swath of low-income, first-generation college students, many of whom are attending either open access public or for-profit colleges? Point is, for most of the students in the latter group, they are not choosing between enrolling in a college where almost everyone graduates or getting a cushy gig pitching venture capitalists in Silicon Valley. Unfortunately, the choice for too many students is between working a low-wage job (rarely a formal apprenticeship) or taking a chance -- often a big chance -- on building some skills that will move them up the occupational pecking order.

What do we learn if the Thiel fellows go on to be wildly successful? That taking the most academically gifted students in the country and putting them in an awesome program flush with resources is a good idea. It doesn't tell us much of anything about whether higher education is a good investment more generally. A four-year degree program is certainly not a good a fit for everyone, and we clearly need a broader array of high-quality postsecondary options. Unfortunately, Thiel's provocative brainchild does nothing to inform this debate.

Andrew P. Kelly (Andrew.kelly@aei.org) is a research fellow at the American Enterprise Institute.