Investing involves more than simply allocating money towards a particular venture. It also involves what we do with our time, which is arguably our greatest resource.
In today’s world Mark and I see a fair amount of futility involved in going to University immediately out of secondary school, and even less reason to do so at the costs involved these days!
While we don’t expect nor think everyone should educate themselves by travel, we do think that looking at alternatives makes sense. We don’t think anyone can argue that you’re better off not having a degree versus having one, but as with any investment we need to consider the costs before assessing whether the reward is sufficient.
From a strictly analytical view, when you factor in a.) the current costs of education, b.) the future costs of enormous debt, and c.) the massive opportunity cost of chewing through 4 to 5 years of your life, then the conclusion we come to is that university is simply not the best option.
Now, before we get a bunch of angry email let me point out that we are well aware that a uni education raises your chances of employment. It also can accrue various social benefits (being around educated motivated people, meeting your spouse, future business partners, etc…) but these things are not exclusive to uni, and almost certainly not worth the costs.
The fact is that the (still) current educational system was built around the time of the industrial revolution and hasn’t changed much since. Clearly the world is a very different place today than it was in the 18th and 19th centuries.
Think about it; schools are run like production factories, accustoming kids to doing things that any sane person would detest. Ringing bells, categorised subjects, separate facilities for boys and girls. We educate kids by slotting them through the system by age group.
This reinforces the view that the most important thing in life is their age. If a kid exceeds his contemporaries (same age group) then he’s automatically labeled as gifted, and often ridiculed by classmates. Where he fails he’s labeled as dumb. Why on earth would we do this?
I know from my own kids, and others I’ve come to know, that some of them are far better at certain disciplines at a younger age and vice versa. Some kids function better on their own while others function well in groups.
From my own experience I spent most of my schooling years thinking I was not too smart. I was bored stiff with school and frequently argued with my teachers on points that I felt worth defending. Rational discussion of topics was, and still is, complete anathema to most school systems. Tell me how individuals are likely to produce disruptive technologies without critical thought and the ability to test alternative theories?
When I hear politicians trumpeting ideas like “no child left behind” I shudder, because it’s all about conformity and standardisation. What it really means is “all children will conform”, and standards will be set low enough for the majority to cope.
I don’t want to entrust my beloved children to the State, only to get back a drone who believes that life is dull, boring and is meant to be that way, but that’s exactly what we’re doing. Independent thought is virtually absent in the current schooling environment.
The thinking that goes with this education has left people with a state of mind not congruent with the reality of our present, let alone future, world. This is clearly seen in people’s attitudes towards physicality and owning one’s own home even while the facts prove otherwise.
One of the most ardent advocates of alternative learning is Peter Thiel, the billionaire co-founder of Paypal. He has set up The Thiel Fellowship, dedicated to lifelong learning and independent thought. Peter encourages students to drop out of University and begin changing the world now.
The foundation provides students with $100,000 to achieve their dreams via entrepreneurial pursuits. The fellows are mentored by a select team of visionary thinkers, scientists, investors and entrepreneurs who provide what is simply not provided in the classrooms of universities across the world. Recipients of the Thiel Fellowship learn by doing, not studying.
Recently I came across another group of entrepreneurs doing similarly wonderful things over at udacity.com. Free university courses on the offer! For those of you who’ve ever wanted to learn how to build a search engine, engineer web applications or learn about applied cryptography, this is where you need to head.
In the same spirit we have webtotherescue.com, which offers free resources for business entrepreneurs and start-ups!
Last but not least I must mention the phenomenal growth and amazing work being done at the Khan Academy.
“If we have learned one thing from the history of invention and discovery, it is that, in the long run – and often in the short one – the most daring prophecies seem laughably conservative.” – Arthur C. Clarke
This is so true! I told my friends that the MBA was expensive at $100K and would provide sub-standard returns on capital (note I’m not saying skipping entire university like you mentioned, only the postgraduate MBA which seems a reasonable gesture at first), and my friends either don’t know how to count or are doing the MBA for whatever reason best known to them.
If you did your MBA and paid $100,000, you would have to give up a $60,000/year job in a good company say Apple or Qualcomm (my friends work here), and post MBA get an $80,000-100,000 job. The delta is 80K to 100K – 60K which is between 20K to 40K per year pre tax and 10K to 20K post tax (50% tax rate). At this rate you will get a 5 year to 10 year payback period after putting the entire the extra money you earned because of your MBA into paying the interest free loan. Note I am not factoring any wage increases (recession?) and not counting inflation (unlikely), and most importantly without any interest on loan (assuming 100K is your entire savings). Is it worth it? I don’t think so. 5 years of your life paying back a loan which was supposed to give you a higher standard of living!
What they said was that they got to meet like minded, ambitious people and had a change in perspective for the humongous price they paid. “What change in perspective?”, “What likeminded people?” I wonder. I got you guys and would learn more making money investing with you rather than doing the MBA with that same amount.
I told them that we could achieve the same result in another way. If you put like minded and ambitious people in a room for 1 year lives are going to change. I just told them there are people out there in the world whom you associate with and your life will change.
“Different Stokes” they said. They said the world also needs MBAs in a team and we fill in the gaps here. I concur with that. We need 1 MBA in our team along with one entrepreneur. We also need 1 technologist and 1 finance man in the team if we are in a business. I can’t see what’s wrong in that explanation (for once).
I told them that had you taken the 100K and put 10K in a high risk oil drilling program which might spud oil in Puntland, Somalia, 10K in the Bakken shale oil exploration program, 10K in Mongolian real estate in UB, 10K in a high grade high political risk gold emerging producer in the Democratic Republic of Congo, and the rest of the 60K in different currencies, you would have been having multibaggers and a few duds on these high risk investments.
Assuming you had the 100K to burn in your MBA, had you burned all the high risk investments (40K), you would still be left with 60K in capital, and you would have been wiser, smarter investor WITHOUT the MBA which is what the MBA is all about in the first place!
Here is the answer I got : “How Shallow!”
You better expect hate mail Chris.
Seems nothing changes. I wrote a very similar article almost 20 yrs ago, predicting that new tech would be the end of college as we know it. I was hounded out of the state-wide homeschool org that I was helping to run because i clearly was a “loose cannon.” It’s been long coming and I don’t think we’re quite there yet, but I believe that my prediction will ultimately be proven correct. Education is the primary means of control of the masses, and they by and large are too well schooled to realize it.