The College Trap
James Altucher knows a lot about being a student. A life-long learner, Altucher not only went to university to study computer science, but later taught himself to be a successful investor and entrepreneur.
Looking at the U.S. economy from his unique perspective on analyzing risks and opportunities, Altucher has found, unfortunately, that the student loan system may the single most destructive force in our country today—not only for the individuals who have to pay back the debt, but for the whole economy. He has also found that the education system is severely lacking.
He sat down with The Epoch Times to discuss what needs to change in order for people to be better prepared for life and success.
The Epoch Times: James, we talked about student loans and how destructive they are in an earlier interview. In your opinion, what needs to change in the education system?
James Altucher: I graduated college, with a lot of student loan debt, in 1989. But that was a long time ago, when debt wasn’t so high. So I was able to pay back all of my debt, and I was able to take risks—starting businesses and taking some risks, and then eventually selling a business.
And as soon as I sold my first business, I paid back all my debt. I actually paid back my wife’s student loan debt as well. Then I was able to move on with life and have certain freedoms.
While starting businesses, I learned certain skill sets about creativity, sales, negotiating, coming up with ideas. I built up a network, and I built up all the things they don’t teach you in high school but you learn in the real world, about how to find your own cushion to fall back on.
It’s not like I went from success to success. I sold my first business, I made money, and then I went totally broke. I lost everything, but I had skills at that point. I majored in computer science. So I had a hard skill that I was able to use to build my first business.
And even after I went totally broke, I was able to take risks again because I didn’t have any debt. And I had developed a skill set of networking and associating with good people and being creative. So I could develop unique ideas, I could negotiate, and I could sell.
I didn’t know anything about business when I started my first business. I was lucky enough to be a programmer at the rise of the internet. So I had some fortunate things going on and then I was able to develop some skills.
Now, can the Utopian solution happen, which is in high school or earlier, can students learn creativity, negotiating sales, business tactics? I say general business skills, [meaning] with 100 micro skills in there. Some of them I mentioned like sales and negotiating, managing people, managing investors, raising money, executing, developing a product, developing a customer base.
There are lots of different micro skills that you have to develop when starting a business. Can a high school teach that? Before higher education? The answer is no, because they’re teaching math, English, science. It’s going to be hard to take an entire country and say, “Oh, all of your standardized tests, which were used to rank all your SATs, the education of teachers—throw that away completely and develop an entirely new form of teaching.” That’s just not going to happen.
Also, the teachers are not business people or entrepreneurs. They’re teachers, so they’re not going to be able to teach how to be entrepreneurs or creatives. They teach what they’re good at.
The other question is, not everyone’s cut out to be an entrepreneur. Some people are going to be artists, some people are going to be writers, some people are going to be policymakers. We shouldn’t cut off those people, either.
The Epoch Times: If you had complete freedom to think of a system that would not have these problems, what would it be?
Mr. Altucher: The Utopian solution is to give people a framework at a younger age so that they realize they don’t need the college experience to be a success in life. And I feel we’re aware that you don’t need college to be a success in life—there are many examples of people who didn’t go to college who are successful.
But 18-year-olds, in general, want to go to college. They just want to. I don’t know how you can suddenly change the mindset of all the teenagers in the country. It’s too difficult. So it’s nice to be able to define a problem like I’m doing with the student loans and [try] to propose a solution to the problem.
I think the solutions are all too Utopian, because the real problem is the price of tuition, as well as the student loans dished out by the government, no matter what the price of tuition is. So demand is just going to keep staying the same. The demand’s not going to go down for college, because somebody is willing to supply you the money.
And it’s not like there are that many new colleges that are being created now. There are online colleges being created but they’re not being accredited. Students think you need to go to an accredited college, meaning the government approves this college. There aren’t many online accredited universities. So supply is not really going up and demand is staying the same or rising.
The price is just going to keep going up, and I don’t really see any solution to that, unless an entire generation of kids says, “Oh, we don’t want to go to college anymore.”
The Epoch Times: But you do point out that going to college is not necessary to be successful.
Mr. Altucher: I am saying don’t go to college or go study online courses for almost free and you could get a better-than-college education online now for almost nothing.
I once did an interview with a kid who got an entire MIT computer science degree online. There are online videos of the courses, and he took all the tests, got them graded, and everything. He did it all online in one year for no money.
Did he get a degree? No. So that’s the problem. He got all the skills because he took four years of classes for free.
But still, kids don’t want to do that. They want to go to college, and I don’t blame them. College is great, and they don’t how to say no to somebody who’s saying “Here’s $200,000, go to MIT.”
I wrote a book, “40 Alternatives to College.” It was the No. 1 book on Amazon under “College” for years. Did that really persuade people? Maybe one or two. But tens of millions of kids are going to college. I think there are around 40 million people with student loan debt right now that they can’t afford really.
But the college alternatives are great. You can choose not to go to college, and your life will be incredible. If you’re motivated and even if you’re not motivated … You could be a bartender while you’re 18, 19, 20 years old. Maybe you’ll have some money saved, you’ll have life experiences, and then you can say, “Wait, I’m interested in gender studies.” Then you can study it online, and you can have a successful career.
Or you could say, “I’ve been working as a bartender for three years. I have an idea for a new app for bartenders.” You could build a business and sell it, or at least make enough money to supplement your income. There’s a wide range of things you could do. So life could be great if you don’t go to college, but it’s hard to convince a whole generation of people of that.
Interview has been edited for brevity and clarity