From: allin
Peter Thiel has voiced strong criticisms regarding the state of higher education in the United States, characterizing the system as a “bubble” with significant financial and societal consequences. He argues that the problems within universities are “far worse” than he initially perceived when he started the Thiel Fellowship program [00:33:22].
The Higher Education Bubble
Thiel views higher education as a bubble that has continuously inflated over the past decades [00:34:11]. He suggests that while he doesn’t offer alternative career guidance, the first step when recognizing a bubble is “probably not you know lean into it in too crazy a way” [00:34:11].
Skyrocketing Student Debt
A core component of this bubble is the dramatic increase in student debt. In 2000, student debt totaled approximately 2 trillion [00:34:19]. This runaway process has led to a situation where graduates from recent cohorts struggle significantly more with repayment:
- For those who graduated college in 1997, most had paid down their student debt after 12 years [00:34:33].
- However, for the cohort graduating in 2009, the median person had more student debt 12 years later (by 2021) than they did upon graduation, indicating that debt is compounding faster than it can be paid off [00:34:51]. This issue was exacerbated by factors such as the global financial crisis, fewer well-paying jobs, and students staying in college longer [00:35:11].
The “Boomer Narrative” and Institutional Decay
Thiel believes that the debate around education is often dominated by a “Boomer narrative” [00:35:34], where older generations, for whom college genuinely worked, may not fully grasp the current challenges faced by younger generations [00:35:37]. He predicts that the higher education bubble will only “be done once the Boomers have exited stage left” [00:35:56].
He also notes a decay in colleges, citing an increase in “bureaucrats” at institutions like UCLA, which may have two or three times as many administrative staff as 30-40 years ago, describing them as “parasitic people” [00:38:48].
Government’s Role in Fueling the Bubble
A significant contributor to the problem is the government’s role in underwriting student loans. Over 90% of the capital in student loan programs is federally funded [00:36:06]. This government backing allows accredited universities to charge more and more, as there’s no market-driven underwriting process to assess a student’s ability to pay or a school’s quality relative to earning potential [00:36:39].
Thiel suggests that the government needs to “get out of the student loan business” [00:36:51]. He also points out a critical change in 2005 under the Bush 43 administration, which rewrote bankruptcy laws to prevent the discharge of student debt, even in personal bankruptcy [00:37:33]. This means that if student debt is not paid off by age 65, Social Security checks can be garnished [00:37:44].
Proposed Solutions
While recognizing the complexity of the issue, Thiel has specific proposals:
- Debt Forgiveness: He supports broad student debt forgiveness, arguing that many students were “ripped off” [00:37:01]. However, he believes the cost should not solely fall on taxpayers, but also on universities and bondholders [00:37:11].
- Market-Driven Lending: If federal lending were to cease, Thiel believes many colleges would either shut down or be forced to rationalize their costs, significantly reducing their size [00:38:24].
AI’s Potential Impact on Education
Thiel notes that AI is “quite good at the woke stuff” [00:22:57]. He humorously suggests that to avoid being replaced by AI, actors might need to be “a little bit racist or a little bit sexist or just really funny” [00:23:03]. More critically, he states that AI will “produce end amounts of these sort of… woke papers,” highlighting a potential flood of unoriginal content that might further expose the existing tendencies of academic “plagiarizing one another” by “saying the same thing over and over again” [00:23:26]. This suggests that AI could disrupt current academic models and potentially expose inefficiencies or lack of original thought in certain areas of higher education.
Thiel Fellowship Program
As a direct response to his concerns about traditional higher education, Thiel created the Thiel Fellowship. This program offers $100,000 to individuals to quit school and pursue their entrepreneurial ideas [00:33:01]. He acknowledges that parents often get “really upset” when their children quit school to join the fellowship [00:33:12].