By Joseph E. Aoun, Special to CNN
Boston, Massachusetts (CNN) -- Investor Peter Thiel has generated attention by making some provocative claims about America's colleges and universities. Thiel has labeled U.S. higher education "a bubble in the classic sense," and believes that college degrees are "overvalued."
Recently, he awarded 24 talented undergraduates $100,000 each to drop out of college and pursue their entrepreneurial ideas. His rationale is that colleges and universities don't do a good job promoting innovation -- and that college holds some people back from accomplishing what they're ready to do. Dale Stephens, who won a Thiel Fellowship, recently wrote a column for CNN.com that expresses this point of view.
As many students struggle with college costs and a depressed job market, Thiel's and Stephens' statements have resonated in some quarters. Tuition at public colleges, where 80% of undergraduates go to school, is rising in many states. Federal budget cuts are threatening recent increases in college aid. The first years out of college can be difficult for some graduates, when their salaries are lower and their student loan debt is high.
But it simply isn't true that a college education is overvalued -- or that colleges and universities inhibit innovation.
Let's consider this latter claim. No reasonable observer of higher education would conclude that colleges discourage innovation. The number of world-changing inventions and discoveries made at American universities is too long to list, but they include the development of the World Wide Web, genetically altered foods, life-saving cancer and AIDS drugs, and the algorithm for Google searches.
Universities have spawned entire industries -- like biotechnology and nanoscience -- that have generated billions of dollars and led to the creation of thousands of companies. They also have engaged countless undergraduates and graduate students in the production of this knowledge, enabling them to launch meaningful careers.
Similarly, Thiel's assertion that college degrees are overvalued doesn't hold up. In boom times and recession, labor market figures consistently show that college graduates have a much lower unemployment rate than their less-educated peers. In May, for example, the government reported that 95.5% of college graduates 25 and older were employed, compared with 90.3% of high school graduates and 85.4% of those without a high school diploma.
In addition, a new Georgetown University study that analyzed the earning outcomes of 171 types of college degrees found that every single one generates a positive return -- even after college costs and foregone earnings are taken into account. It found that, overall, college graduates make 84% more over a lifetime than their high school-educated counterparts.
That's a strong indicator of the value of a college degree.
Thiel's statements also miss the bigger picture. First, they ignore the fact that preparing students for careers is just one important part of what colleges do. For example, in a recent national survey conducted by the Pew Research Center, more than 90% of college graduates reported that college helped them grow intellectually and mature as individuals. College expands students' horizons, exposes them to ideas and fields of study they might not encounter otherwise and fosters relationships with diverse peers. It prepares people to become engaged citizens in ways that few other experiences can.
But his economic arguments fall short as well. Time and again, countries have relied on colleges and universities as the surefire way to expand their economies and promote social mobility. In the 1950s, the dramatic expansion of higher education in the United States helped create the American middle class. In one generation, South Korea propelled itself from the ranks of the world's poorest nations to among the world's richest, in large part by emphasizing higher education.
Today, America's strongest global competitors are doubling down on the same strategy. In China, the number of students enrolled in higher education more than quintupled over the last decade. India has established thousands of new colleges in recent years. The United States was the first nation to expand college access beyond the elites and make it available on a mass basis. Today, we rank 14th in the world in college graduation. To reclaim our leadership, everyone needs to do their part.
Colleges and universities should continue to provide options that can make college more affordable, such as online and flexible degree programs. The federal government should build on innovations like income contingent repayment of college loans and loan forgiveness for graduates in public service careers. To preserve the mission of public university systems, states either must reinvest in higher education or give their universities more autonomy.
American higher education is facing some complex issues. But a college education is still the most reliable ticket our citizens have to a lifetime of prosperity and advancement. By working together to resolve these challenges, we can ensure that college remains as secure an investment as ever.