PayPal Co-Founder Hands Out $100,000 Fellowships To Not Go To College

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This December 9, 2010 photo shows a screen shot of the online payment site PayPal.

Peter Thiel handed out the fellowships because he said innovation happens quicker in a start-up environment than at a university. But he also wants to use the fellowships as a way to bring up broader questions about the value of higher education.

Peter Thiel, the PayPal co-founder and one of the first investors in Facebook, is proposing a controversial path toward more rapid innovation. Today his Thiel Foundation announced that it was giving 24 people under 20 $100,000 fellowships to drop out of school for two years to start a their own companies.

Some of the recipients are leaving first-rate institutions like Harvard and Stanford to take the fellowship. In a press release, the foundation's head, James O'Neill, said that in taking the fellowship they were "challenging the authority of the present and the familiar."

The Chronicle of Higher Education reports that Thiel thinks ideas can develop in a start-up environment much faster than at a university. And the project is also intended to question the idea of higher education. Thiel told TechCrunch in April that the United Sates was in a higher education bubble.

"A true bubble is when something is overvalued and intensely believed," he told Techcrunch. "Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It's like telling the world there's no Santa Claus."

The Chronicle of Higher Education adds Thiel is doing just that:

Students today are taking on more debt, and recently tightened bankruptcy laws make it more difficult to shake that debt, he argues, and those factors make higher education a risky investment. "If you get this wrong, it's actually a mistake that's hard to undo for the rest of your life," he said.

Critics contend that even so, Thiel's advice to leave school and develop a business is applicable only to a tiny fraction of students and that Thiel's own success, aided by business relationships forged during his days at Stanford, argues against leaving school.

But Thiel is convinced that the social pressure for students to pursue "lower-risk trajectories" in their career choices will lead to less innovation in the future.

Thiel, whom The New York Times calls a "contrarian" and "libertarian," told the paper that not everyone should drop out of college:

The fellows agree to stop getting a formal education for two years but can always go back to school. The problem, he said, is that "in our society the default assumption is that everybody has to go to college."

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