Salman Khan in his recent talk at LinkedIn was asked how he would reinvent higher education and what he thought about Peter Thiel’s 20 Under 20 Program. In response, he shared his image of the ideal university for the modern world. He shared his vision for a university complete with students that get paid for real-world work, self-paced learning fashioned after the Khan Academy and advisers that include some of Silicon Valley’s most prominent. Watch the question and answer on video here or read the transcription of the answer below.

To give you all background, Peter Thiel, one of the founders of PayPal, he runs Clarium Capital, another hedge fund guy. He’s been pretty vocal about this bubble in higher education. He has been pretty good at spotting the previous bubbles, the housing bubble, the tech bubble, and all of that. It is a bubble because people are willing to pay ridiculous amounts of money on the perception that it is a good investment when it really isn’t. Which is what a bubble is, right. That’s true of the housing bubble and that was true of the tech bubble.

And so his kind of contribution beyond just talking about, his attempt at kind of disrupting it, which I think is in the right direction, but I don’t think it goes quite enough, is he started this program where he is targeting the same kids that would otherwise go to Stanford or MIT or Harvard or whatever and saying look, I will pay you 100 grand if you drop out of school and come start a business.  And he is trying to make it so there is something very desirable, like a very prestigious to have, and will probably help your career that doesn’t cost money. That you would give up that other thing, you would give up the college degree. And this might become more desirable.

I think what would really work, to take his thing to the natural edge. I have thrown it out as a crazy idea three or four weeks ago and now it is getting little less crazy idea. I think it would be awesome to start a University, for lack of a better word, in say Mountain View. And this first university, I don’t want to make it sound elitist, but it would focus on the best and the brightest. It would focus on the same kids who are applying to Stanford and MIT and Harvad and all of this right now. And I will tell you a tangent on why I say that, I think that is the only way that you can disrupt. Because if you can, so the goal here is instead of these students paying 50 thousand a year and going into debt, they would be paid. And The reason why I say that is if you can make the best education have negative tuition, I am going to make a geeky calculus analogy, by the squeeze thereom you know literally how can anyone else justify charging anything? If the best education is negative tuition.

And so you get people to come in and their curriculum is literally 6 months at LinkedIn, 6 months at Google, they work in software engineering, they work in product managment, they work in marketing, they work in p.r., they work in accounting. 6 months at Apple, 6 months working for a VC firm, 6 months developing Ipad apps or whatever. And they are paid. Some of the money goes to the students, maybe 30 grand a year and then some goes to the University to set up the environment that you should have. So it is not this purely commercial thing. You have all of the things that we all liked about college. You have a campus, you have pretty trees to read books under, you have venues to meet your future husband or wife.

And you have a scaffold of truly academic material that you can do at your own pace, something like the Khan Academy. And the faculty. And you have seminars, “hey I have a project at LinkedIn but you know what, this is going to require some signal processing, but I don’t know signal processing.” I go back to the campus. There are either other students there, there are Khan Academy [type] resources or there are mentors in the Valley who are willing to work with me on signal processing. And then I learn it. And you go through this and what is going to happen is that these students are going to end up finishing not with debt, they are going to have money saved. They are going to be way more desirable by, you know, this whole slew of companies.

And they kind of have this downside protection because they still have a little bit of an academic scaffold. They will do well on the MCAT, the GRE  if they decide to become a doctor or lawyer, they can still do that. I think if you do that, it will be pretty hard for Stanford to justify charging. You know the other thing is that we could go right out the gate ‘cus if you can get the employers involved, especially these sort of marquee employers, and maybe even the Khan Academy because we have a brand in the right place. You don’t face the difficulty of starting a University that no one has ever heard of. People will hear of this university on day 1. And so I think something like that, and if that is successful, then all of a sudden, the tuition inflation becomes very hard to justify. And then you can start more and more of these across the country at different levels with different specializations.

Salman Khan is then asked a follow up question about Olin in particular.

I think the problem with Olin, I actually know Olin pretty well, my advisor at MIT actually ended up becoming a professor at Olin. I think the problem with Olin is the reason that people are paying $200,000 right now is to have a signal to send to the job market that I kick butt. And even though Olin, I haven’t gone to Olin, but I can imagine that it is probably a very good education. That is not the reason that people are spending $200,000, people are spending [is because] they want that signal, “I went to MIT”, “I went to Caltech”. It’s the brand.

And so Olin has a problem with that, and it also has the problem with the connections. I don’t know if Google, maybe Google does, but I don’t know if Goldman Sachs recruits at Olin even though maybe they should. They don’t know what Olin is. And so I think the key thing is to have some type of partnership with very marquee recruiters, because if you get an ecosystem of ten of the top tier, the companies that everyone wants to work for, the other companies, the other companies, next tier of companies are going to say wait, if Google is getting, if LinkedIn is getting all their talent their, we better get our talent there too. We (the second tier companies) don’t want it to look like [they] are getting the scraps.

I think it is very important to build a whole ecosystem there and actually the big difference is that the projects would be stuff that actually matters. If I were to have recommended this 50 years ago, people would have said, “oh my god, but you are making people do vocational stuff. That’s horrible. It’s commercial.” But the reality is that the stuff going on inside LinkedIn, the Software Engineering, the analytics, the marketing is, the stuff that is going on at Google is more intellectual than the software engineering projects that we worked on as undergrads. It is more intellectual than almost anything then the kind of made up projects that the university gives you right now.

So I think if you build a whole ecosystem and I think Silicon Valley is the perfect place to do it. The one thing that I learned at Khan Academy is that there is a lot of people that have made it who are super smart that are just kind of orbiting the valley looking for someone to mentor. Looking to kind of disrupt things a little bit. You can imagine instead of this school showing off about how many Nobel Laureates on their faculty, no we have the CEOs of this company, this company, these are our people that are entrepreneurs and have done amazing things that are our falculty. These are the people who you have access to as mentors. I think it would be very hard to compete with this.