Investments get to be bubbles partly because investors widely believe there is no alternative on which to spend their money. Dotcoms were seen as the only real growth play, so shareholders hung in there even after it had become clear that the pricing was uncomfortably high. Housing possessed a supposed unique level of riskless-ness as did the loans used to finance it. Many investors have figured out that U.S. treasuries are deep into bubble territory, but, they ask ‘What other haven asset is there?’
It’s the same with the college tuition bubble. Look at the comment section of any of the articles I’ve written about this topic during the past three years and you’ll see something like this: “Yes, most diplomas are from second rate schools in second rate disciplines and they are nearly worthless. And tuitions are sky high. But what alternative do we have? How do you get an education without it? More importantly, how do you get a job?”
It’s a legitimate question, one that I’ve been wrestling with for quite some time. You see, I’ve been writing about the college bubble hypothesis for three years, but I’ve been living it for ten.
My oldest son, Christopher, was not college material. You probably have the wrong idea: it’s not that Chris isn’t smart. Chris is brilliant. But brilliance is not enough to make you college material. Something else is needed: at least an average level of compliance. Pliable personalities find it much easier to sit through the lectures, take the exams, write the papers, amass the pre-formulated proportions of certain credit hours in certain prescribed order, and fill out an enormous volume of paperwork for the privilege of entry into all of the above.
Some people find all of that to be easy; in fact, many like being told what to do. It gives them a sense of security. Other people find it all difficult, but do it anyway. The latter often seek release from the sense of institutional claustrophobia by embracing a life style of sexual and chemical anarchy in those enclaves of rebellion known as fraternities.
Chris just couldn’t do it. He couldn’t contort his mind into the arbitrary exercise known as SAT Prep. It was not that he didn’t want to learn. On the contrary, he was a voracious reader. It’s not that he didn’t want to work. On the contrary, he had not only worked for various family businesses from radio production to economic analysis and publishing since he was about 9 years old, but had also started a few micro-businesses of his own; web sites which he was able to sell at a nice little profit.
I understand Chris; I’m the same way. I barely graduated from high school. I would routinely skip class so I could go to the library and read my way through Mortimer Adler’s Great Books collection. College was similar. After an initial two semesters of compliant Dean’s list performance. I started blowing off classes which I didn’t like, dropping out of them, often after the drop out date. But while all that was going on, I was working my rear end off busing tables in the cafeteria, mopping floors, and scrubbing pots…and sitting in the library reading voraciously. A few professors took the trouble to let me learn my way. Mostly, they didn’t get me, and I didn’t get them.
Eventually, I gritted my teeth, switched to a business school, Robert Morris, focused like mad, got good grades and graduated two years later with a degree in accounting. I hated every moment of it. My hair went grey. I got a good corporate job with a solid salary. I hated that too.
After some dues paying I got funding to start an economic think tank. It worked: the foundation rapidly grew in influence and 9 years after graduation, I was invited back to Robert Morris not as a student, but as its commencement speaker. My career since then has been anything but normal and my work and learning style has been anything but compliant.
There are a lot of guys like that out there, and young women too. Christopher was one of them, and he was permitted to go his own way. Only two things were required of him: character and productivity. College, not being essential for either of those, was optional. And he agonized over the options. Lots of people told him that he absolutely must go to college. His mother, my ex-wife, was mortified by the idea that he would not go. But then again, Chris noticed that she had dropped out of a prestigious school half way through and nevertheless had a successful career as a professional proofreader/editor who was so much in demand that she was turning clients away.
Chris talked to lots of people about this, but the clincher for him was the advice he got from Ron Morris. Ron is a highly successful serial entrepreneur whose latest venture is an entrepreneurial talk radio network. Having sold his business for a tidy pile of cash, Ron was constantly receiving pitches from entrepreneurs looking for start-up investments. Many of those came from kids who had just graduated from prestigious universities. He told Chris that if he had a choice between betting on a 23-year old who had just graduated from a top school, or betting on a 23-year old who had worked for a small business, all other things being equal, he would choose the latter. Better still if the 23-year old had founded a small business—even if the business failed. Chris had his answer.
Now, this isn’t fairy tale stuff. He didn’t throw away his SAT prep materials, found Facebook and become a billionaire. He simply did his work for the family business which is largely producing this television program. He also owns and maintains a few websites which generate modest revenue streams (like this), and builds on a sub-contracting basis some sites owned by other people like this. He’s a frequent guest on Ron’s radio show and an occasional guest on Cornerstone Television Network.
He got a lot of flak from friends and acquaintances for his non-college decision, chiefly because he and his brother, Jeremy, during their college-aged years moved in a social circle of college students from Chatham University. They just couldn’t fathom it.
A couple of years ago, Chris married a Chatham girl, and a lot of their friends are her school friends. This provides a lot of helpful data about the school vs. school of hard knocks decision.
At age 27, Chris has no consumer debt, no school debt (obviously), no car debt and only a small mortgage. He has a small retirement account which he started with the proceeds from a web site he built in his teen years. He and his wife are homeowners. While some of their college friends are apartment dwellers, many are boomerang kids who have returned home to live with their parents. Almost none of the ones who are employed are employed in their chosen field of study. Income-wise, Chris is at about the same level as the subset of his college-grad friends who are employed. Asset/liability wise he is well ahead of the pack.
He has enormous personal freedom, which he loves. He is a man of good character, and he is productive. That’s all that is required. Everything else is optional – including college.
Mr. Bowyer is the author of "The Free Market Capitalists Survival Guide," published by HarperCollins, and a columnist for Forbes.com.