An interesting new college model - Minerva

Excellent article about a new innovative college – Minerva (named after the Roman goddess of wisdom). 

Minerva does not see itself competing with the Massive Open Online Courses (MOOCs) like Coursera and the Khan Academy. Instead they view the content and lectures in these new entrants as complementary to what they offer and believe that fee online content will get even better and more extensive over time.

I hope that we see many new entrants in the post-secondary world of education.  We need massive trial and error to break down many of the conventions that are restricting us from delivering more learning and more job creation for the dollar spent. Maybe it is time to focus less on football, climbing walls, park-like campuses and more on education. I think that fewer high school grads should immediately head off to college, and maybe they only need two or three years before they can be ready to start or join a business or move onto the next phase of life.

One vestige that Minerva retained is “on-campus” residence halls. But the classes are not in person with a professor (who might be working from anywhere in the world) via an interactive on-line discussion and testing process of discussion, debate, and quizzes.

After the first year in San Francisco, each student changes locations each semester, allowing the student to experience different societies.  Today the other campuses are in Hong Kong, Buenos Aires, Berlin, London, Cape Town, Mumbai, New York and Sydney.

It is great to see some experimentation in higher education.

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Another angle on the collateral damage of college finance

We recently posted an article about how college debt is an inhibitor to graduates starting businesses.  

College grads with big debt payments have fewer options as a result of the minimum college loan payments they make every month.

This study at RealEstateConsulting.com tells the tale of another unintended consequence of college debt – they also can’t afford to buy a home.

Here is the gist of the report:

“Student debt has ballooned from $241 billion to $1.1 trillion in just 11 years.

29 million of the 86 million people aged 20–39 have some student debt.

Those 29 million individuals translate to 16.8 million households.

Of the 16.8 million households, 5.9 million (or 35%) pay more than $250 per month in student loans, which inhibits at least $44,000 per year in mortgage capability for each of them.”

Reminds me of that Toby Keith song: “I wish I didn’t know now what I didn’t know then.”

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Common sense about college from Robert Reich

Robert Reich, former U.S. Secretary of  Labor, has some common sense about our investment in four year liberal arts educations versus two year technical programs in this editorial.

Here are some of Reich's main points:

"For one thing, a four-year liberal arts degree is hugely expensive. Too many young people graduate laden with debts that take years if not decades to pay off."

"And too many of them can’t find good jobs when they graduate, in any event. So they have to settle for jobs that don’t require four years of college. They end up overqualified for the work they do, and underwhelmed by it."

"Consider, for example, technician jobs. They don’t require a four-year degree. But they do require mastery over a domain of technical knowledge, which can usually be obtained in two years."

"Yet America isn’t educating the technicians we need. As our aspirations increasingly focus on four-year college degrees, we’ve allowed vocational and technical education to be downgraded and denigrated."

Well said Mr. Reich!

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A College Degree and the Law of Supply and Demand

I don’t know how many times I have seen the statistic that a college education results in career earnings of more than $one million over the individual’s lifetime.  Well I call BS on this number every chance I get.  The figures do not factor in the IQ, family wealth and the socio-economic background of individuals that graduate from college versus those that do not.

But most importantly these amateur statisticians forgot one major economic factor – the Law of Supply and Demand.

The rarer the asset (in this case a college diploma), the more valuable it is.  The more common the asset, the less valuable it is. In 1960 about 8 percent of Americans 25 years old and older had college degrees.  By 2009 the percentage had reached 30 percent.

And here is where it really gets nuts.  Despite the fact that so many recent college graduates are back working as waiters where they toiled during college, some suggest that the answer to our economic challenges is for far more high school grads to attend traditional college.

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David Letterman says "Send your kid to college."

"If you can, send your kid to college. So they get a degree, and at least then, they will know what kind of work they're out of." David Letterman on his monologue August 22, 2014

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College debt can interfere with being an entrepeneur!

Any prospective or active entrepreneur should be reading Kevin Johnson's book: The Entrepreneurial Mind 

Here is a reminder from Kevin Johnson about the dangers of debt.  If you have any desire to start your own business, don't get stuck with $200,000 of college student debt.  Here is how Kevin puts it:

""Research indicates that the great majority of entrepreneurs will never receive money from a venture capitalist or an angel investor. Instead, they will fund their businesses with their own money and via credit cards. According to a report by the National Federation of Independent Business, in 2009, 83 percent of businesses with fifty employees or fewer used credit cards. This point is important, because how you manage your personal finances determines how much money you can borrow for your business and at what interest rate."

Peter Thiel the cofounder of PayPal, angel investor and venture capitalist adds this: "Learning is good. Credentialing and debt is very bad. College gives people learning and also takes away future opportunities by loading the next generation down with debt." 

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Investors, Traders and Entrepreneurs. 

Self-education

"Formal education will make you a living; self-education will make you a fortune." - Jim Rohn, entrepreneur, author, motivational speaker