Investor Pays Students $100,000 to Drop Out

By Renee Klahr on October 31, 2012

This fall, Facebook investor Peter Thiel paid 20 college students $100,000 each to drop out of college and become entrepreneurs, making the bold statement that you don’t need a college degree to find success.

Thiel, who began this experiment last year with 24 different students, is a strong proponent of an emerging thought that questions the inherent value of college in a changing economy.

The Billionaire’s project seems especially timely, as college tuition costs continue to skyrocket, leaving students who can’t find work in colossal debt. Thiel’s argument is founded on the basis that, as these costs rise, students are better off putting their money towards new projects that could “change the world.”

“I think college is still definitely important, but I do recognize that it is losing its value as people capitalize on the business end of higher education instead of the educational end,” Kelsey Sutton, a sophomore at the University of Maryland, said. “When more and more people are going to college, the value of a degree decreases.”

As an alumnus of Stanford University, Thiel has come under strong fire for imparting the wrong message to students by encouraging them to spend their college funds on personal projects.

Thiel has been candid about this dichotomy, claiming the system of higher education that led him towards success is no longer the well-oiled machine it used to be.

“You increasingly have people who are graduating from college, not being able to get good jobs, moving back home with their parents,” he said in a recent New York Times interview. “I think there’s a surprising openness to the idea that something’s gone badly wrong and needs to be fixed.”

However, a look at the last batch of “Thiel Fellows” has produced mixed approval of his radical methods. Inc. Magazine recently revealed that only one of the five fellows interviewed had earned a steady income.

Yet, at least one fellow has certainly reaped the benefits of Thiel’s generosity.

James Proud, 20, sold his company Giglocator, which allows people to find and purchase concert tickets based on their music interests, for a minimum of six-figures this past summer.

By selling his company, Proud said he now has enough money to use as a hefty fall-back while he goes off to pursue other interests.

So in the end of the day, as people search for stability, what is the more practical choice: a college degree or a career?

“It’s going to be a climb either way, whether you’re working towards a degree, or a successful business model,” Dave Strimas, 24, a 2011 graduate of SUNY Plattsburgh, said. “Both sides require endless amounts of hard work.”

Ultimately, students who elect to go to college must now weigh their options accordingly. As Thiel surmised, just because you go to college doesn’t mean a job will subsequently follow.

“I just graduated and I was lucky enough to find one, but I also busted my butt to get to where I am today,” Strimas said. “It’s not impossible to get a job, but you have to want it more than the next guy and you need to keep wanting it. You can’t let off for a second.”

Similarly, not every student will be given a Thiel-esque grant to spend without consequence.

Future entrepreneurs who set out to invent the next big thing, even within the fellowship itself, must accept that they are throwing caution to the wind.

18-year-old Taylor Wilson, one of this year’s “Thiel Fellows,” is fully aware of the path he has chosen.

“College is the safe route,” Wilson, who built his first working nuclear reactor at 14,  recently told reporters at the New York Times. “The fellowship is definitely not the safe route. There’s a risk, but the only rewards come with risks.”

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