Despite rising tuition & stagnant wages, College education still holds great value


What do you get when college costs skyrocket but average incomes barely budge? Yet another blow to the middle class.

“As the out-of-pocket costs of a college education go up faster than incomes, it’s pricing low and medium income families out of a college education,” said Mark Kantrowitz, publisher of financial aid sites and

via Rising college costs price out middle class – Jun. 13, 2011

Median Income is stuck at about $33k per person USD since 1988. The median income for households is $46,326 and for dual earner households is $67,348. Median tuition for four year institutions has increased from $2500 per year to $6500 per year. How much is an education worth when it allows you to face 4.5% unemployment during one of the greatest recessions of our country’s history? For people over 25 years of age the unemployment rates by education level break out like so (source June 3,2011 US Bureau of Labor and Statistics Employment Information release):

  • 14.7% for high school dropouts
  • 9.5% of holders of a high school diploma
  • 8.0% for those who have some college/and or an associates degree
  • 4.5% for college graduates

That’s half the current national unemployment rate of 9.1% and less than 1/3 of the rate for high school drop outs. That is a huge difference even before you account for the higher median salary earned by people who hold bachelors, masters and doctoral degrees.

Second, the returns from a degree have soared. Three decades ago, full-time workers with a bachelor’s degree made 40 percent more than those with only a high-school diploma. Last year, the gap reached 83 percent. […] Construction workers, police officers, plumbers, retail salespeople and secretaries, among others, make significantly more with a degree than without one. Why? Education helps people do higher-skilled work, get jobs with better-paying companies or open their own businesses.

via College Degrees Are Valuable Even for Careers That Don’t Require Them –

In the previous post World War II decades, you could conceivably work for the summer or full time during the summer and part-time and pay for most if not all of school. That is all but impossible for today’s college entrants from middle class households due to college’s continually escalating tuition and fees. So many students have to borrow to pay for their educations, and yes, they do incur debt, but they more often than not are gainfully employed and able to pay those debts off. In too many articles the question becomes “is college worth it?” instead of: “what colleges and universities in a state offer the best value for the average student from that state?”. Example: If you are from my hometown of Harrisburg, Penn State Harrisburg and living at home is a much more affordable proposition than going to main campus at University Park . The degree is the same, the tuition is cheaper and most parents wouldn’t charge room and board to their children.

The Thiel Fellowship’s 20 under 20 fund, an eponymous project funded by Peter Thiel. Thiel alleges that college is turning people into debt slaves and that his fellowships results will prove the weight of that debt is unnecessary.

Instead, these teenagers and 20-year-olds are getting $100,000 each to chase their entrepreneurial dreams for the next two years. ”It seems like the perfect point in our lives to pursue this kind of project,” said Cammarata of Newburyport, Mass., who along with 17-year-old David Merfield will be working on software to upend the standard approach to teaching in high school classrooms. Merfield, the valedictorian of his Princeton, N.J., high school class, is turning down a chance to go to Princeton University to take the fellowship. […] ”Turning people into debt slaves when they’re college students is really not how we end up building a better society,” Thiel said. […] Thiel says the ”20 Under 20” program shouldn’t be judged on the basis of his own educational background or even the merits of his critique of higher education. He urges his critics to wait and see what the fellows achieve over the next two years.

I would assume Thiel means that his Fellowship will provide a template for a learning experience that is a superior alternative to a college education. Except what his program is achieving is not a replacement of the partial or complete college education.

1. Where do Silicon Valley’s power players and productive workers come from?

Apparently, half of the people who work in the region where Thiel made his money hail from Thiel’s Alma mater. Stanford University. I’ts one of the top research institutions of higher learning in the world. Not only that, Stanford is a primary source of Silicon Valley entrepreneurs:

Today, more than 50 percent of Silicon Valley’s product comes from companies of Stanford alumni — and that excludes Hewlett-Packard, one of the Valley’s largest firms.

Not only can you learn how to create, the networking opportunities are staggering. Thiel can draw on his connections from Stanford undergrad and Stanford Law. He also lectures at Stanford as well. Thiel doesn’t want critics to consider that he has been extensively educated and continues to contribute to the Stanford academic community years after his graduation when debating whether or not his Fellowship program makes sense.

2. How do the countries where Thiel has lived value educational attainment?

Thiel, a native of West Germany (now part of unified Germany) and grew up in Foster City, CA which today boasts median incomes of $135470/$118231 for households/dual earner households, respectively). Germany allows students to go to college for free or next to nothing as long as they pass a certain battery of tests. If he wants no debt slaves, he would propose that the US adopt a system more like Germany’s the more expensive a program is, but that would be against his libertarian ideal.

3. Thiel believes the biggest source of academic research funding is actual a detriment to society’s progress.

Thiel is a libertarian. A radical one. You know who subsidizes most research funding? The federal government. Let alone the cheapest access many students had to funding for school was the Pell Grant program which has been reduced due to the new found conservative implemented (libertarian owned) thirst for less government intervention. Where would students get 100,000 per student for two years for any program in perpetuity?

4. Thiel’s candidates have access to taxpayer subsidized AP classes.

Most candidates in this fellowship group seem to have been raised in affluent, above average environments. Two are from Newburyport, MA and Princeton, NJ, localities that also enjoy a much higher median income than the average tax payer. Newburyport, Mass. has a yearly median income of $78,557K per household, $103306 for dual earner households. Princeton, NJ has a median income of $94580 per household and $123098 for dual earner households. Why does this matter? Public schools here have multiple AP courses under English, Mathematics, Social Studies and Science. If these kids graduated from these high schools with AP credits under their belt, they are already at the “Some college” level of educational attainment and there was no debt incurred to pay for those classes. (This includes the home schooled fellows.)

5. The Doogie Howser candidate.

Some of the fellowship recipients have become college graduates prior to being awarded Thiel’s grant and 100k:

The foundation’s website said the winners include Andrew Hsu, who started at the University of Washington at age 12 and was, at age 19, pursuing his Ph.D. at Stanford when he left to work on his startup. Darren Zhu is dropping out of Yale to pursue his interest in synthetic biology, and 19-year-old Eden Full has already founded a solar energy startup. Laura Deming enrolled at MIT at age 14 and is working on ways to extend the human lifespan by hundreds of years.

Even more of the fellowship recipients have attended college or taken college level courses and I would bet many if not all have parents who were able to direct them to advanced learning experiences (summer or after school advanced classes, internships at companies they worked with or owned) and more resources than the average teen student (information access and equipment). These are things most accessible to students through college study.

6. Theil’s candidates have most probably been offered full academic scholarships to a lot of fine programs

What of the fact that these top students probably all had tons of scholarship offers. In fact these offers may even help guide the Fellowship’s selection. Thiel is attempting to claim he is striking out against the college debt issue by enriching students who have the best chance of getting free education.

The Thiel Fellowship seems like a fine program (as long as there are no strings attached after the 100K and two years are up).

A fellowship program that is basically an incubator for exceptional students run by an exceptionally rich businessman with the ability to provide exceptionally generous capital is an exciting alternative to internships, co-ops and entry level jobs for the very best graduates of the very best programs. In that, this fellowship is an innovative alternative to an honors program.

But it isn’t an experience mutually exclusive from a college education nor the college experience. Furthermore, Theil’s program does nothing to create a free market solution that would keep kids attending college and leave them with less debt. I don’t know what “the results” will show except that Thiel solved a problem that doesn’t need solving by giving those who have the best funding options for college (students with affluent educated parents, top grades, top assessment test results, genius level IQ, stable nutrition) more money. Thiel is a hard edged libertarian and this fellowship is a model for finding the cheapest possible way to recruit the best talent to create corporate enterprise.

This fellowship and any other programs like it should be mentioned in “is college worth it” conversations when it is an actual functional alternative for the average student. Right now it isn’t. The great thing about the US higher education systems and private counterparts is that there are so many opportunities to students around the nation and rising tuition does decrease that access, but it isn’t completely prohibitive to the middle class.