Don't Send Your Kids to College

This is an excerpt from James Altucher's just-released book, The Forever Portfolio. For the first excerpt, please click here.

Things are simpler than they appear. I'll give you an example. Let's say you want to beat everyone in your family at Scrabble. You have two choices. You can read every book you can find, build an enormous vocabulary, look up the definitions of words you don't know (that will help you remember them better) and use your advanced knowledge, painstakingly constructed over years, to defeat all opponents.

Or you can remember the following five words: "xi," "xu," "za," "qi," and "qat." "Ka" and "ki" are not so bad either. And every now and then "aa," "ae," and "ai" can prove incredibly useful. These are all legal words in the last edition of the official Scrabble dictionary. What do they mean? I have no idea. You don't need to know. Somehow, though, za is slang for pizza. I've never heard that before, nor will I ever use the word za in place of pizza. Apparently it's used on the West Coast, but I've never heard anyone from there use the word "za". Apparently, people from Trenton, N.J., use the phrase "tomato pies" instead of pizza, but I grew up 20 minutes from there and never heard anyone use that phrase either. Some things are mysteries.

Once you are OK with the fact that "xu" is a legal word, then that means you can essentially slap that "X" down on a triple-letter score with much greater ease than any of your opponents really thought possible. While they are all stuck with their Qs and Zs, you're racking up 50-point two-letter words and winning the game. The same goes for poker.

I taught my eight-year-old daughter how to play poker the other day. Since I'm dead-set against the idea of her going to college, I figure she might as well get some skills as a gambler. Every time she's about to lie to me in poker, she looks to the left. Once I told her she did that, she sometimes looked to the left on purpose to make me think she was lying when she was actually telling the truth. That's called controlling your opponent, when you tell them something and then they try to use that information against you, but you know in advance they will do so. She became a fool two times over and had no chance while I took all her money. But it was a learning experience for her.

I said I have no intention of sending my kids to college. And this is the crux of the matter, I feel, for young people who want to be successful over the next 50-year period. I find the thought of college these days abhorrent, particularly for kids aged 18-20. Kids have a lot of energy at that point, and to deaden it with a forced, unsupervised diversity of random topics taught by mostly mediocre professors is a waste of that. I can't remember anything good coming from my freshman year other than that I started a business with a few of my classmates that inspired me for other businesses later on. We set up a business called CollegeCard, which was a debit card that we offered to college students. This was 1987, before credit cards were common for college kids. Parents would send us money, which we'd deposit in the student's account with us, and the students could then use their cards up to that amount. My role in the company was to convince every business in town to not only accept our card but to offer discounts to its users. At night, I also ran the delivery business, which delivered from every restaurant that accepted our card. I was notoriously incapable of generating any tips although one of my partners, Wende Biggs (daughter of Barton Biggs), always got great tips. And I had an unrequited crush on her. Thankfully, she'll never read this because she lives on a farm in France now.

Let's summarize quickly what's wrong with college:

1. First and foremost, it's too expensive. To send a kid to college you basically need up to $200,000. (I know these numbers are debatable, but bear with me and consider all expenses and a top-tier school.) That's insane. There's no way the incremental advantage your children get from having a diploma will ever pay that amount back. Perhaps for the first time ever the opportunity cost ("opportunity cost" being a phrase I remember from Economics 101) of college does not equal the extra profits generated by the degree.

2. I don't believe in a balanced education. Most colleges require kids to take a smattering of art, math, sciences, etc. Taking 10 different courses a year on wildly different topics, with enormous homework responsibilities in each one, not to mention droning, boring professors for at least eight of the 10, is the surest formula for creating complete non-interest and inability to remember anything in any of the topics covered. What a waste of $200,000.

3. There are far better uses of time.

What could you be doing instead of college?

a. Working -- not just a labor or service job, but there are manyInternet-content jobs out there that are available to high school orcollege-age kids. I have high school and college kids working for me right now who are making over $50,000 a year from writing gigs on the Internet. Kids can scour Craigslist for opportunities, beloved blogs or Web sites related to their favorite interests. Companies are dying for good content. Create your own blog, get noticed, build relationships with other content companies and communities, and so on.

b. Take half the fee for one semester, give it your kid, and tell him or her to start a revenue-generating business. Not every kid has entrepreneurial sensibilities, but it's always worth it to at least try once. And the cost for starting a business is next to zero, so it's a very viable alternative. What business should she start? For one thing, now that Facebook and MySpace have open development platforms, spec out a few applications for these platforms; for a few hundred dollars outsource development of these applications to India, and get your friends to start trying them. Make sure they are viral (i.e. a message should appear "click here to get all your friends to try XYZ") and see which ones are a success. I mention Facebook and MySpace because every kid is familiar with these sites and comfortable with the subtleties, and it's this comfort that can create the best businesses.

c. Spend a year trying to get good at one thing. Whatever your child'sgreatest interest now is, whether cooking, chess, writing, math, there are so many resources on the Internet available for learning that college is almost the last place a kid should go to pursue a passion. Intense, several-hour-a-day immersion in a favorite topic is the surest way to become an expert in that field.

d. Charity. Pick a favorite cause and do nothing but that for a semester or a year. Build houses in Appalachia, for instance. Feed dinners to the homeless. Or take one semester's tuition, set up your own micro-charity and give the money out in $100 increments to good causes or situations your child thinks are worthy. Write up each situation in a notebook, and by the end your child will have a whole life of lives changed.

And what about travel? Well, I'm not a big believer in that unless it's supervised. There's plenty of time to travel later in life. Right at home there's a plethora of opportunities that can far exceed the value of a college education at one-tenth the cost, and lead to greater experience and opportunities in career, wisdom and life development.

It doesn't take detailed knowledge of string theory to appreciate a sunset. And "ka," in addition to being a word that babies sometimes use, is also the Egyptian mythology definition of the human soul. Don't try to make things overly complicated to fool people into thinking your smart. Just make things as easy as possible and learn from everything around you, not just the classroom.

Note: Stocks mentioned in The Forever Portfolio include Sirius ( SIRI), Dendreon ( DNDN), GM ( GM), Wal-Mart ( WMT), Google ( GOOG), Yahoo! ( YHOO) and Goldman Sachs ( GS).

At the time of publication, Altucher and/or his fund was long Goldman Sachs, although positions may change at any time.

James Altucher is president of Stockpickr LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for the Financial Times and the author of Trade Like a Hedge Fund, Trade Like Warren Buffett and SuperCa$h. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback; click here to send him an email.

TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.

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