James Altucher: Your kids are about to make a terrible mistake…
“I will not send my kids to college. College is the leading cause of what is breaking America in half. It’s making the poor poorer and the rich richer.“ –James Altucher
Welcome back to the Stansberry Radio Interview Series.
As you know, every Saturday the Stansberry Radio Network is bringing you the most valuable ideas from the most intriguing guests from all of our shows.
Today’s interview tackles a controversial question:
Should you send your kid to college? Or, if you happen to be eighteen years old and reading this, should you go to college?
Entrepreneur, investor, author, and radio host James Altucher says no.
James has written 11 books, including the recent Wall Street Journal Bestseller, “Choose Yourself!” He’s published articles in The Financial Times, The New York Observer, and over a dozen popular websites. He has started and sold several companies for eight-figure exits. He’s also run several hedge funds, venture capital funds, and is a successful angel investor in technology, energy, and biotech.
James’ views on college are generating a lot of interest. In fact, James was on The Glenn Beck show this week talking about it. James says giving your money to a college is one of the worst financial decisions you can make in your life.
To find out why, read on…
Originally aired on the Stansberry Radio Network on May 23, 2014
Aaron Brabham: Hi James, I think this show is going to be fun today, but before we begin let’s first define what we’re talking about. Are we talking about undergraduate four-year degrees? Are we talking about grad school? What are we talking about here?
James Altucher: Hi Aaron, and thanks for jumping in and playing the devil’s advocate today. The main thing I want to talk about is that kids should not go to undergraduate college.
On average, it takes somebody five years to graduate undergraduate college. So we’re talking about those precious years of eighteen to twenty-three.
But, I want to add that I also think most graduate schools are worthless. I don’t think kids should go to graduate school. And I actually think most high schools are worthless after a certain point. But let’s not go crazy here. Let’s just talk about college. Kids should not go to college, particularly in today’s day and age.
Brabham: You went to college, I did also and we turned out okay. Why do you feel so strongly about this?
Altucher: Well, I want to address later whether or not I turned out okay from college. That’s an assumption that I’m not sure is correct [laughter]. But that is part of my reasons for not going. I’m experienced at what happens in college.
People will often say to me, “Oh, it’s easy for you to say. You went to college and now you don’t want anybody else to go to college.” But I saw what happened in college, you saw what happened in college. It’s not a big secret how much of it is a waste and how little of it is worthwhile. But we could talk about that in a bit because I think there’s other important reason we need to address first.
I first started writing about this about ten years ago. I wrote a column in the Financial Times – Why you shouldn’t send your kids to college. And I got so much hate mail it was ridiculous.
If you go to the center of Times Square and say, “Kids shouldn’t go to college”, you’ll get hung up and crucified. It’s the American religion that kids should go to college. This is part of how we standardize the American workforce. And the reality is that because of these kinds of weird incentives that exist, the debt load that people are willing to undertake, that young people and their parents are willing to have, is ridiculous.
The level of student loan debt now is over a trillion dollars.
So for the first time ever sending kids to college burdens them with this debt that they’re never going to be able to pay back. They’re going to be forced to take underpaying job. The job situation is getting worse and worse and most importantly they’ll be afraid to take risks because they have this debt to pay back.
You can’t get rid of this debt through bankruptcy, so you’re just stuck. You’re chained to the master. And the master is the banking system and the government and, in some cases, your parents and in other cases, your jobs or your factories or wherever you’re working.
You’re just chained to the system because you have this massive debt load to pay back. And it’s just really sad. Students are being railroaded into this banking and government scam and their hands are chained behind their backs.
The most important thing is that the incentives are totally aligned against the eighteen-year-old, but their parents and their peers and their guidance counselors and their teachers and their future employers who have already been through the college system don’t know this.
That’s what makes it scary for the eighteen-year-old. Everybody is against them if they want to make the decision not to go to college.
Brabham: So right now we have, I don’t know, probably 2,000 18-to 20-year-olds, some are in college, some aren’t – shaking their heads at this podcast saying…
“I know there’s one thing that you need to have for a lot of jobs out there because they say it on their process for their job posting. You need to have a four-year degree. How do you beat that?”
Altucher: Yeah, if you want to work in middle management at Proctor & Gamble, then you’re gonna need the four-year degree. And if you want to work at Goldman Sachs, then I hate to say it, not only are you gonna need a four-year degree, but you’re gonna need it probably in quantum physics and probably from Harvard and they’re gonna check your SAT scores as well.
It used to be if you wanted to work at Google, you needed to show your SAT scores and all your college records. Now Google has just announced they’re not asking for GPAs anymore. And a rising percentage of employees at Google don’t even have college degrees. So some companies are starting to get it that you don’t need a college degree.
But you’re right, Aaron, that some companies – because the employers themselves went to college, have a bias, a cognitive bias, “Oh, because I went to college and spent all this money and all this time, it must be correct. So I’m only gonna hire people who made the same correct decisions that I did.” And so they’re only gonna hire people with college degrees. So the real key is – and I always get back to this, unfortunately, it’s like a broken record, but the real key is to choose yourself because we all know that the college degree only gets you your first job. After that, nobody will ever, ever again ask you what piece of paper you have in your hand. They’re only going to want to know what value you’ve delivered in your professional career.
People get hired in the future parts of their career based on their value, not based on a piece of paper they got out of some institution. So, yes, for some jobs, you do need a degree just because that’s historically been true. It doesn’t mean that’s the correct thing to happen. And I think we are in a transition where more and more people, particularly more incredibly intelligent people are avoiding the college route. Companies are starting to get a little more open towards alternatives. But we are in transition still and that’s going to be a while.
Brabham: Yeah, and I’ll add to that, I think that getting a four-year degree gives younger people some kind of sense of entitlement to get a job that requires a four-year degree, which means they might get an interview, but then they don’t prepare properly, whereas somebody who didn’t have a four-year degree would feel the need to really study the company and add value to an interview and would head and shoulders be chosen over that other person
Altucher: Yeah, that’s incredibly important. If you prepare and actually solve problems for the company that you’re applying to they’re going to hire you. They’re not going to say, “Oh, my God, this kid could potentially make us $10,000,000 a year out of profits… Oh, but he doesn’t have a degree, so we can’t hire him.” Maybe that’ll happen on rare occasions, but that’s gonna happen less and less.
Instead of going to college, in that four- or five-year period you could actually become a master of whatever area you love. And by the time you’re twenty-two or twenty-three, you’re so far ahead of your peers that you’ll be able to make millions of dollars a year and get any job you want. But you probably won’t even want one because you’ll know how the world works by that point. And again, we’re a world in transition where this is starting to happen more and more.
Brabham: Yes, I agree but what about the eighteen-year-old who has no idea what they want to do in life? College does give you the opportunity to be exposed to a lot of different types of interests.
Altucher: Yeah. So if you have no idea what you’re going to do, the first piece of advice I would give you is don’t immediately spend $100,000 or $200,000 on something if you don’t know what the outcome is going to be. That’s more money than you’ve ever spent before.
And just don’t spend that money and put yourself into debt if you have no clue what you want to do. So that’s my first piece of advice.
My second piece of advice is with much less money, start trying things that you might want to do or try different things that are free – like write a book, go to the library, try painting, try being a stand-up comedian, travel a little bit… Give yourself a budget and try to travel as cheaply as possible. Start a business. There are many businesses you could start with much less money than it would cost to go to college.
Don’t just give that money straight to the college and then the banks and then the government. Use it to build your network and your personality and your experience with failure.
I often say to people, “Become an entrepreneur.” And the parents are the ones who respond to me and say, “Well, not every kid is meant to be an entrepreneur.” And on the one hand, that’s sort of true, not everybody is meant to start a business, but everybody should go through the experience. Think of all the great things you learn while starting a business. You learn how to come up with ideas, you learn how to execute your ideas, you learn how to communicate with people, you’ll learn basic sales. You’ll learn basic negotiation skills; you learn how to manage people. And most importantly, you learn how to fail.
So in college, you never really learn how to fail. I never failed at anything in college. I didn’t start failing really seriously until I was a full-blown adult. And then I was like, “What the heck is happening here? I never failed before.” It was catastrophic to me to experience failure. I thought I was an all-A student to some extent.
And so to get back to your question, if you’re eighteen and you don’t know what you’re going to do, find out what you want to do and what you’re interested in first before you spend any money going to some place where you’re going to get just all this crap thrown at you. And then you have to decide what you’re gonna do. You’re gonna be massively in debt and you’re gonna be pigeonholed into a cubical and you’re gonna be indoctrinated into the system.
You don’t want to be a robot either. So try to learn from the inside out rather than from the outside in what you want to do.
Brabham: All right. Let’s switch up a little bit. We’re getting towards the end here. Let’s give some real-world practical alternatives to college as if you have an auditorium full of eighteen-year-olds literally with their bags packed and their parents outside ready to take them to college. What can they do instead?
Altucher: Aaron, I’m glad you asked that.
A few years ago I wrote a book: “40 Alternatives to College.”
For an ENTIRE YEAR, this book was the number one book on Amazon about college.
Now, for the first time, I’m expanding the book and releasing “50 Alternatives to College.”
Whether you are a parent trying to decide whether to make the financial commitment, or an 18 year-old trying to decide on the biggest decision of your life, this book will tell you the facts and at least give you alternatives.
Please don’t make the mistake so many make. This is a life or death decision. Choose life.
Crux note: James regularly hosts “The James Altucher Show” on Stansberry Radio. If you’d like to hear more from James, or listen to today’s interview in its entirety, click here for James’ radio show blog.