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Thursday, July 18, 2013

Is There a Viable Alternative to College?

During a recent conference, a man around 50 pulled me over to the side. He said he had a serious question to ask me about his daughter’s education. I said, “of course,” but I already suspected what the question was, because I’ve been asked it a hundred times.

“I’m preparing to spend some $100,000-plus on my daughter’s college education, and that’s despite loans and scholarships. It’s a major financial strain. I want her to succeed, but my fear is that the cost is not worth it. What do you think?”

It’s not so easy just to say yes. Or to say no. When it is your kid’s life, this decision could be epic, and the results of your choice could echo in this world long after you are gone. This is why parents start feeling terrible anxiety over college from the time their child enters high school. The scramble for scholarships, the pressure on standardized tests, the push for a maniacal academic focus—it all defines the teen years. This angst ends up causing terrible family tensions and seems to punish kids for just wanting to be kids.  (For more information, see “Best Alternative to College: Launch Your Career Now.”)

And even if the teen does everything right—every test trained for and taken five times, every activity listed on the portfolio, a high GPA, top of the class, early applications and admissions—you are not home free. You are going to spend six figures, but there is also a high opportunity cost: you remove your child from remunerative work for four years, and this is after four years of no employment in high school. That means both lost income and lost job experience. College is costly in every way. 

Meanwhile, the job market is tight in ways that previous generations have never known.  Fear of new health-care mandates makes companies reluctant to take the risk on full timers. The Association of Graduate Recruiters reports that jobs available for new graduates will fall by 4 percent again this year, with 85 applicants for every 1 job available. Government has been cracking down on internships and they are very hard to come by.

A chilling survey from Reuters shows that 42 percent of existing college graduates are underemployed, meaning part-time work and few opportunities to expand. A third are $30,000 in debt, and 17 percent owe up to $50,000. Only half of those who find full-time work are actually employed in their field of study. Some 40 percent of those surveyed believe that they will have to spend more time and more money on an advanced degree to get the job they really want.

But even then there are no guarantees except for the sheer cost of this gamble. Unemployment among 20–24-year-olds is actually slightly higher this year over last—the only demographic for which this is true. Among this group, the unemployment rate (according to the narrowest measure) is 13.2 percent—a figure that would cause national panic if it applied to adults. Most of these kids have a safety net called parents. 

You don’t need the surveys to tell you any of this bad news. When the parents of today’s late teens were that age, the world was their oyster (which they “with sword would open”). They didn’t worry. They didn’t think that much about jobs while in college or after. They could take time off and follow the Grateful Dead, languish in European backpack travels, take temporary positions they could easily quit, or anything else. They could pretty much take a job they wanted at a time of their choosing. 

The world is completely different today and parents know this. The results of 50 years of government programs that pushed higher education as the ticket to happiness and prosperity are in—and they don’t look good. The massive loans, subsidies, and incentives didn’t make people in general smarter and richer. They just diverted resources and squeezed out private alternatives. 

Cracks are starting to show in the entire apparatus that government built. Now, at mid-summer, while preparing for school to start again, millions of parents are seriously vexed about their children’s future and especially about the tremendous problem of college costs. No one knows for sure if it is a good choice, but the risk of foregoing college altogether is too high. 

The data bear this out, too. Workers without college degrees earn on average about 60 percent of what a college graduate earns. And there are other chilling correlations, such as how two-thirds of the prison population is made up of people without college degrees. It’s a fallacy to confuse correlation with causation, but nevertheless such facts give one pause about foregoing higher education altogether. 

It’s no surprise that parents end up coughing up even at tremendous financial sacrifice. Parents would gladly step in front of a bus to save their children, so facing debt and financial loss for a few years seems just part of parental obligation. This is why, in economic terms, the demand for college is relatively inelastic: Parents keep paying and paying no matter how bad it gets.

(As an aside, America has a very strange education system, once you think about it. People presume that all education from first to twelfth grade should be “free of charge” as a human right, but one year of formal education after that should cost the fullness of an average family income!) 

For how long will people bear this tremendous cost without demanding some alternatives? 

The other day at lunch, I saw a hint of how the present situation might change in the future. I was talking to a very talented graphic-design artist and I asked him about his college education. He said that he dropped out after his sophomore year to take a job in the industry. 

He explained: “I couldn’t take the risk of not being employed after graduation. In my field, the employers regard college as evidence that you are willing to waste lots of time and money doing not much of anything productive. I decided to gain the competitive advantage and jump into the workforce at the age of 20, get experience, and start climbing the ladder.”

That set me back a pace or two. I had expected that we would start to see this happening in the future, that at some point employers would regard a college degree as a liability, as evidence that a person has few skills and a high sense of entitlement. But to meet someone who had already acted on this scenario was intriguing. 

Here’s my prediction: We are going to see the emergence of more credible one- and two-year alternatives to college. These programs will combine real work experience with rigorous learning and cost a small fraction of what college costs. It can’t work for some professions like law and medicine, mainly because of government controls and guild-like admissions certifications. But in fields like technology, design, and business, this seems like a great idea. 

Sound good? I know of two such programs now. 

One is Enstitute, a two-year program that focuses on real skills and apprenticeships with tech companies and non-profits. It’s already difficult to gain admission given the flood of applications. 


Another institution takes this idea and adds a liberal-arts focus, which seems like a great idea. It’s called Praxis, and it is accepting its first batch of students for this fall. The program lasts 10 months, and, according to the website, can be treated as a college substitute, a pre-college program, or a post-college program. 

“It’s for entrepreneurial 18- to 25-year-olds who want real-world career experience and the best of online education all in one … Don’t get stuck choosing between the intellectual value of a humanities degree and the practical value of a business degree or work experience. Get it all.”

Such programs directly address the number-one complaint that all employers report about new graduates: They are good at sitting in desks and that’s about it. This is a serious problem. These innovative programs actually recall the types of apprenticeships that were common before the government decided that everyone should be stuck in school during the most productive years of their lives. 

These programs smash the paradigm that’s been around since after the Second World War. They are the grass growing up in the sidewalk cracks. Just as homeschooling changed the way we think of elementary and secondary schooling, combined work-and-study programs like Enstitute and Praxis might change the way we think about college forever. 

It has to happen. For five hundred years, college was for philosophy, theology, history, and language, and a small percentage of the population attended following rigorous high school experiences. In the last 50 years, college has become the educator of everything while high school has become dominated by extracurricular concerns. 

Can this change be reversed? As with the housing bubble, the trend will change when people perceive the costs as outweighing benefits and bail out. As this tendency grows, alternative programs will grow and thrive. The path toward a freer educational market will be paved by private entrepreneurial efforts to meet the human needs that government programs leave unserved.