What is a College Education Really Worth?

Did Peter Thiel pop the bubble? That was the question on the minds of parents, taxpayers and higher education leaders late last month when the co-founder of PayPal announced that he was offering $100,000 to young people who would stay out of college for two years and work instead on scientific and technological innovations. Thiel, who has called college “the default activity,” told USA Today that “the pernicious side effect of the education bubble is assuming education [guarantees] absolute good, even with steep student fees.”

He has lured 24 of the smartest kids in America and Canada to his Silicon Valley lair with promises of money and mentorship for their projects. Some of these young people have been working in university labs since before adolescence. Others have consulted for Microsoft, Coca-Cola and other top companies. A couple didn’t even have to face the choice of putting off college—one enrolled in college at age 12 and, at 19, had left his PhD studies at Stanford to start his own company.

Of course, Thiel’s offer isn’t going to change the way most universities do business anytime soon. These 24 kids represent the narrowest swath of the country’s college-bound youth. (Though it’s important to note: When we talk about America having the greatest system of higher education in the world, these are the kind of people we’re bragging about.)

There’s not much reason to worry that this program is going to produce a nation of dropouts, contrary to the fears of some wags such as James Temple, a columnist for the San Francisco Chronicle. Temple called the premise of the fellowships “scary” and worried about the broader message they send. However, as a country, we are still creeping along toward President Obama’s dream of universal higher education. Obama sees this not only as a way for all individuals to have the opportunity to reach their full potential but also as a key to the nation’s ability to compete in the global marketplace.

But Thiel put a dollar figure on something that certain young people may already have suspected was true. A friend of mine whose son, a budding Internet entrepreneur, just graduated from Yale told me about a conversation that her son reported having with another somewhat successful start-up founder. The latter had dropped out of Harvard Law School to launch his business, and he advised my friend’s son to drop out of Yale—venture capitalists would know that he was serious if he was willing to give up that Ivy League diploma. My friend was a little horrified, having already dropped somewhere around $200,000 on her son’s education, but it does raise the question: For a smart kid from an upper-middle-class family who went to one of the top high schools in the country, and who already has a business going, what does a college diploma mean?

Colleges have long been engaged in an odd deal with students and their parents. Paying for a college education—or taking on a huge amount of debt to finance an education—is a transaction in which most of the buyers and most of the sellers have fundamentally different understandings of the product.

Think about it this way: Suppose I start a print newspaper tomorrow. I might think I’m selling excellent journalism, while my “readers” are actually using my product to line their birdcages. It might work out fine for a while. But the imbalance in this transaction would make it difficult to talk in general terms about improving the product or whether the product is worth what I’m charging. I might think I should improve my grammar and hire more reporters. My customers might want me to make the paper thicker.

In the college transaction, most parents think they’re buying their kids a credential, a better job and a ticket, economically speaking at least, to the American dream. Most college professors and administrators (the good ones, anyway) see their role as producing liberally educated, well-rounded individuals with an appreciation for certain kinds of knowledge. If they get a job after graduation, well, that’s nice, too.

The students, for the most part, are not quite sure where they fit into this bargain. Some will get caught up in what they learn and decide to go on to further education. But most will see college as an opportunity to have fun and then come out the other end of the pipeline with the stamp of approval they need to make a decent salary after graduation.

So does Thiel’s offer suggest that a university diploma might be most useful lining a birdcage? Yes and no. He has certainly undermined the worth of a credential. But it is universities themselves that have undermined the worth of the education. It is to their detriment that they have done so, certainly, but it is to the detriment of students as well.

In the recent movie “The Social Network,” Mark Zuckerberg is shown devoting endless hours in his room to computer programming. He goes to a few parties, but mostly he is engaged in his new business venture, “the Facebook.” How is this possible, one might wonder? Was he flunking out of his classes? No. Thanks to the wonders of grade inflation and the lack of a serious core curriculum, it is possible to get through Harvard and a number of other high-price universities acing your computer science classes and devoting very little effort to anything else.

Colleges and universities have allowed their value to slip by letting students call this an undergraduate education. There is no compelling understanding among students of why they are there. Studying is not how they spend even the bulk of their waking hours, and their classes seem random at best. They may spend Monday in “19th Century Women’s Literature,” Tuesday in “Animal Behavior” and Wednesday in “Eastern Philosophy,” but these courses may bear little relation to any they took the previous semester or any they will take the next.

A 2010 report called “What Will They Learn?,” published by the American Council of Trustees and Alumni, an organization that emphasizes traditional education, surveyed the curricula of more than 700 colleges. About 4 percent require students to take a basic economics class. A little more than a quarter of the public institutions and only 5 percent of the private colleges and universities require a single broad survey course in American history or government. And only 61 percent of colleges and universities require students to take a college-level mathematics class.

General education requirements are no longer general at all. They are absurdly specific. At Cornell, you can fill your literature and arts requirement with “Global Martial Arts Film and Literature.” And at Northwestern, the math requirement can be fulfilled with “Slavonic Linguistics.” It’s little wonder that smart students think their time is better spent coding.

So yes, Zuckerberg was wasting his parents’ money and his own time. Why pay to be at Harvard if that’s what you’re going to do? Why not take a class on Dostoyevsky or the history of Christianity or astronomy or ancient history? You are surrounded by some of the most learned people in the world, and you are holed up in your dorm room typing code. (One could place some blame on the students, but it’s hard to fault people for not knowing what they don’t know.) Surely Thiel has the right idea when it comes to the Zuckerbergs of the world. And colleges have only themselves to blame if they lose some of these very smart young people to his fellowships.

Beyond the top tier, there are also gaping holes in higher education. Executives at U.S. companies routinely complain about the lack of reading, writing and math skills in the recent graduates they hire. Maybe they too will get tired of using higher education as a credentialing system. Maybe it will be easier to recruit if they don’t have to be concerned about the overwhelming student debt of their new employees.

Employers may decide that there are better ways to get high school students ready for careers. What if they returned to the idea of apprenticeship, not just for shoemakers and plumbers but for white-collar jobs? College as a sorting process for talent or a way to babysit 18-year-olds is not very efficient for anyone involved. Would students rather show their SAT scores to companies and then apply for training positions where they can learn the skills they need to be successful? Maybe the companies could throw in some liberal arts courses along the way. At least they would pick the most important ones and require that students put in some serious effort. Even a 40-hour workweek would be a step up from what many students are asked to do now.

If tuition continues to rise faster than inflation, and colleges cannot provide a compelling mission for undergraduate education, we may move further away from Obama’s vision of education and closer to Peter Thiel’s.

Naomi Schaefer Riley, a former editor at the Wall Street Journal, is the author of the forthcoming “The Faculty Lounges…And Other Reasons Why You Won’t Get the College Education You Paid For.”