Imagine this: You're a 17 or 18-year-old high school senior. You're very interested in a career in tech and you're looking at colleges. According to the College Board, the average cost of tuition and fees for the 2013-2014 school year was $30,094 at private colleges. That figure is actually quite low if you're considering entering a top-tier college or university. For example:
- Harvard currently lists tuition and fees for the 2013-2014 school year at $56,407
- MIT provides a similar estimate of $55,954
- Rensselaer Polytechnic Institute (my alma mater) currently reports tuition and fees of $59,229 (plus the mandatory purchase of a laptop but you can't really get away with going to college without a computer these days so we'll omit that for now)
Now, add in the cost of that computer, books, supplies, travel to and from school when necessary, parking fees if you bring a car, and you're in the hole somewhere in the range of $60-65,000. Per year.
Now multiply that by four (well, let's make it 4.15 assuming an approximate 85% four-year graduation rate ... which is actually quite high but we're working off figures from tier-1 universities which boast those kinds of graduation rates so we'll be fair about it) and you end up with a figure between $249,000 - $269,750; so let's call it $260,000.
Yes, that's right, TWO-HUNDRED-AND-SIXTY-THOUSAND-DOLLARS.
But this is an investment, right? That degree makes you far more valuable in the workforce and you're going to get a better, higher-paying job because you have it. True. But that doesn't mean you're going to get 100% of that value back and that there's not a better way.
Now let's paint another picture ...
You're an executive at a major tech company with lots of job openings. Recruiting top talent is one of the most important aspects of continuing to be a leader and an innovator in your industry. You're Google, LinkedIn, Facebook, Twitter ... or any number of other tech firms that needs quality engineers, data scientists, mathematicians, etc. But there are two problems: Our country is not producing enough qualified candidates to fill these roles, and the ones that we're producing come with a very high price tag.
While there have been recent studies indicating the STEM (science, technology, engineering, and math) crisis may not be what we've been made to believe (my issues with those studies is a topic for another article - Google "STEM shortage" or "STEM shortage myth" for those arguments), as someone who's gone through the hiring process for software engineers very recently, I promise you the shortage of qualified applicants in this country is very real.
So put together a tremendous demand (competition for these recruits is INCREDIBLY high), a lack of supply, and a supply-pool that is coming out of college over a quarter-of-a-million dollars in debt. What does that equal? High-priced talent that still has little-to-no disposable income. According to salary.com, the average starting salary + bonus for a Software Engineer I in New York City is $70,720. In San Francisco, it's $73,267. Now add in benefits like health insurance and its skyrocketing costs, 7.5% of that salary in social security, unemployment insurance, workers' comp, 401(k), etc. and that single employee fresh out of college costs you much closer to $100,000 / year.
Sounds like a lot, right? It is, especially when you consider you still have a fresh, green recruit that will likely learn somewhere in the range of 95% of their job on the job itself; training you're paying for while you have an employee that's producing very little revenue.
But wait, it's not over! There's another problem. A quality Software Engineer with just three years' experience will cost you well into six figures in either one of these locations. So you better be willing and able to hike up that salary regularly and rapidly or all that money you spent in recruiting and training becomes wasted and you have to start all over again.
So what about that high-priced talent? This is a lot of money, so they should be sitting pretty, right? Well, let's switch gears and put you back in the position of the college grad and do the math (we're going to use some round numbers and assumptions here as this is intended to be an estimate and a rough guide with which to illustrate an idea):
|- Loan Pmt
* Assuming a total federal, state, and city tax liability of 30%
** $1,500 / month assuming you can find a decent place with a roommate in one of the cities listed above
*** Three meals per day at a cost of $5 per meal
$3,900 is $75 / week. Now let's assume you also need to clothe yourself and pay for other human necessities, maybe you'd even like to go out for drinks with friends and coworkers every once in a while, and possibly even buy your mom and dad a Christmas and/or birthday present, and that money is gone in a flash. Let alone actually saving anything for the future.
Ok, so here we are. I apologize if it took a while to get here but it should be readily apparent by now that we have a problem, not just that college is expensive for students, but also for our corporations and small businesses. And I hope you didn't just gloss over that 95% on-the-job-training figure above, because, while I did just make it up, it's based off of very real experience.
College provides a good base of knowledge but any good recruiter will tell you that the best hires are those that are most willing and able to learn, not those that come with the largest base of knowledge. The reason for this is because of that tremendously steep learning curve that occurs when we transition from the theoretical world of the classroom to the real world of the workplace.
Herein lies my solution. Let's do a little more math (sorry, I know, but I promise I'm getting there) ...
Estimates vary but it seems to be a good number that Google hires about 2,000 people each year. Let's assume, for argument's sake, 250 of those are fresh into the workforce. At an average cost of $100,000 we now have 250 high-paid employees costing the company somewhere in the range of $25 million and ending up with nothing at the end of the year except having survived on their own.
What if we had a different way for this entire process to unfold? Imagine this ...
Welcome high school graduates to Google University's [New York, San Francisco/Mountain View, et al.] campus! Congratulations on being accepted to one of the premiere technical educational programs in the world. Here at Google University, your room, board, and education are on us for the next two years, where you're free to live in the apartment we've assigned you in one of the most amazing cities in the world. Your compensation (in addition to the food and shelter) for the next two years will be your education.
You will attend weekly seminars with some of the world's most talented engineers, managers, and business minds. Your first year will be spent in a rotational program geared to help you find the field you're most interested in while providing you with a broad knowledge-base to build your career from. After your first year, you will rank your area of study by preference and you will be placed by a combination of your preference and your performance in the group that best suits both your wants and the company's needs, where you will actually contribute to business operations here at Google.
Once you graduate from the two-year program, you will be offered a starting salary of $45,000 per year (with regular yearly cost-of-living increases and the potential for promotions based on performance) and you must remain a Googler for four more years. If you decide to leave Google within those four years, you will owe us for the pro-rated cost of your education based on years of service.
Best of all, this arrangement works well for both of us! If you read the article in NextStop Magazine, you would know that after four years of college you would be making $25,000 more per year than we're offering you. However, applying the same costs and formula used in that article, under our system your disposable income will actually be higher ($6,200) in your first year of employment. You'll also begin your career two years earlier and won't be paying $20,000 per year in student loan payments for the next thirty years of your life at a total cost to you of $600,000! You may come out of the two-year program with some debt, likely to be somewhere in the range of $5,000 - $10,000, but the incredible quality of education and the two additional years of earned income rather than increasing your debt liability will make that easy to pay off very quickly.
For us, at scale your housing and food will cost us far less than it would cost each of our students individually, and we have the ability to not only direct your education toward real-world problems and solutions that are being faced by our business right now, but you will be in a position to actually contribute to our bottom line while you're learning! When your education is complete, we're able to pay you far less than we would otherwise have to, but you'll end up with more in your pocket at the end of the year. It's truly a win-win!
What do you think? Would you attend?
Photo: Flickr | 68751915@N05
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