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Skip College and Get Rich?

David Callahan

Study after study shows that college still pays off financially. Quite apart from the well-known income gains that come with post-secondary degrees, more education also translates into a much higher net worth on average.

The most recent data from the Census shows that Americans with a bachelor's degree had a median net worth in 2011 of $147,148, compared to $43,945 for those who only finished high school. And Americans with a graduate or professional degree did even better, with a net worth of $240,750. Those are big differences. 

Yet study after study also shows that the financial risks and downsides of college are growing. More young Americans never finish college but still end up with student debt. And, as a recent Demos report by Robert Hiltonsmith shows, student debt can undermine lifetime wealth accumulation. 

Another problem is that any number of professional occupations that require college or advanced degrees just don't pay very well -- at least relative to the cost of living in areas where those jobs tend to be clustered. If you're a college professor in Syracuse, you'll be in good shape. If you teach in Boston, New York, Washington, Los Angeles, San Francisco, or Seattle -- well, good luck. 

The same could be said for lots other professional careers that tend to draw highly educated upper middle class young people and are concentrated in top urban centers: social work, arts administration, nonprofits, entertainment, and public service. Rising healthcare and childcare costs are one problem. But housing is the big killer, and ironically, the outsized success of some highly educated Americans in sectors like finance have badly squeezed those in the educated class who don't make the big bucks. 

Journalism is a great example. Most of the top jobs in journalism are located in places like New York and Washington. Yet while median pay for journalists has actually slipped in the past decade or two, housing prices in these cities have soared. 

Even selling your soul in corporate law no longer offers the sinecure it once did, as I wrote here a few weeks ago and as the New Republic spotlighted in a recent cover story

The travails of the professional class has been a theme of such books as The Two-Income Trap, Strapped, and Nan Mooney's 2008 study of this exact topic, (Not) Keeping Up With Our Parents: The Decline of the Professsional Middle Class

So I'm not reporting breaking news here. Nor am I spotlighting a problem that comes remotely close to the plight of a working class that has been absolutely shattered in the past three decades. 

Still, the fact that so many educated people who do everything right struggle so hard is yet more evidence of a diminished American dream. And while the solutions to elevating the working class are pretty clear -- more unions, a higher minimum wage, more generous social insurance programs -- it's not so clear how to help those in the professional class who don't go into lucrative fields. Even if college were free and debt weren't a problem, and even if health insurance were more affordable, these professionals would still find themselves financially strapped in urban areas now dominated by high-earners. And yet moving out of those areas isn't the solution, because so many of the good professional jobs tend to be in the most expensive parts of the country. 

By now, you'd think there would be more focus on charting alternative paths to economic success for smart and ambitious young people. If loading up on degrees and debt, and then trying to make ends meet in Westchester, isn't working so well for some slice of today's go-getters who want to do something interesting in life, shouldn't we be thinking of other ways to do well? 

Yes, we should be. And more people are. One notable example is the initiative by Peter Thiel to support enterprising young people who skip college to develop business ideas. As his foundation describes it:

Thiel Fellows are given a no-strings-attached grant of $100,000 to skip college and focus on their work, their research, and their self-education. They are mentored by our network of visionary thinkers, investors, scientists, and entrepreneurs, who provide guidance and business connections that can’t be replicated in any classroom.

Thiel's project has gotten lots of attention, but so far it is very much a one-off thing. And many have criticized Thiel -- with his two degrees from Stanford -- for sending the wrong message to young people. But Thiel's on to something, and so is Charles Murray, who outlined interesting ideas in his recent book for bypassing the time-consuming and expensive four-year college route.  

The key question is this: Can we imagine a well-established new path to success for ambitious young people who graduate high school with a strong education and want to both do well financially and do something interesting with their lives?  

I'll tackle that question in my next post.