The World's Richest Dropouts

Michael Dell enrolled as a biology major at University of Texas but spent more time fiddling with stacks of computer parts in his dorm room than hitting up the library. Instead of studying, he started selling new computers through advertisements in local papers.

It was a lucrative distraction. By the end of his freshman year, Dell was selling about $80,000 a month in computers. With the money rolling in, Dell decided not to return to school.

He dropped out of college at 19 to run the company that would become Dell Inc. Within the next few years, Dell's annual sales passed $100 million. This March, Forbes' pegged Michael Dell's net worth at $16.4 billion.

Our most recent list of the world's richest included 1,125 billionaires. At least 73 of them, like Dell, dropped out of some stage of schooling.

Those 73 are like Dell in another way too: They didn't drop out to watch daytime television on the couch. They left school to work hard.

Dell explained his attitude to University of Texas grads at a 2003 commencement address: "Circle the pitfalls and highlight the opportunities. Then build a vision of how it could all be better and work like hell to make it happen."

Sheldon Adelson is another billionaire lacking a degree but possessing plenty of hustle. Adelson enrolled at City College of New York but didn't finish, probably because he was too busy with other ventures.

When he was 12, Adelson borrowed $200 from his uncle to start selling newspapers. He dropped out of college to become a court reporter. He also worked as an ad salesman, a consultant, and a tour-business operator.

That relentless drive led him to his first big windfall. He organized the computer industry trade show Comdex and made handsome profits leasing out exhibition space. He's since jumped into casinos, where he's been adding to his fortune ever since. In Forbes' most recent list of the world's billionaires, he ranked 12th with a net worth of $26 billion.

Some billionaires didn't even make it as far as Adelson in school. Richard Branson, who had dyslexia, was a lousy student. He dropped out at 16 to start a magazine.

To fund the publication, he also started a mail-order record business; the venture grew into Virgin Records. He took a risk by signing a raucous band called the Sex Pistols, which had already been cut from two other labels. Other hit acts followed, including Boy George and Peter Gabriel.

Plenty of other companies have followed as well. He's since expanded into airlines, health insurance and medical care. Next stop: space. His latest company is Virgin Galactic, which hopes to shoot tourists beyond the Earth's atmosphere.

But don't get the idea from these billionaire dropouts that school is worthless. Even the world's most famous dropout (and its third-richest man) acknowledges the importance of a good education.

Bill Gates left Harvard during his junior year to work on a little company he'd started called Microsoft. He recently testified before Congress on the importance of improving the U.S. education system.

"Too many of our students fail to graduate from high school with the basic skills they will need to succeed in the 21st-century economy, much less prepared for the rigors of college and career," said Gates.

School has other benefits too, like who you meet. In 2000, billionaire Steve Ballmer took over the role of chief executive of Microsoft from Gates. The two lived down the hall from each other while they were both students at Harvard.

Top Five Wealthiest Dropouts

1. Bill Gates
Founder of Microsoft
Net Worth: $58 billion
Dropped out of Harvard University

2. Li Ka-shing
Hong Kong businessman
Net Worth: $26.5 billion
Dropped out of school at 12

3. Sheldon Adelson
Casino owner
Net Worth: $26 billion
Dropped out of City College of New York

4. Larry Ellison
Founder of Oracle
Net Worth: $25 billion
Dropped out of University of Illinois

5. Roman Abramovich
Russian oil magnate
Net Worth: $23.5 billion
Dropped out of college

B-Schools Wary on Lehman, Merrill Impact

As the financial landscape shifts, B-schools are busy reaching out to nervous students whose job prospects are suddenly far from certain

These are usually the days when business school students are settling into their class routine and awaiting the arrival of recruiters on campus. But with the downfall of two of Wall Street's investment houses and fears that other major companies are on the brink, it's a nervous time at B-schools.

How bad will it be? Most business schools contacted this week say it's too early to tell, but Alan Johnson, CEO of Johnson Associates, a compensation consultancy. predicts hiring will be down by as much as 50% this fall, with students entering what will be one of the most fiercely competitive job markets in recent years.

"While most banks will not admit it, we expect to see few people hired in the fall and banks waiting to see how the environment evolves," Johnson said on Sept. 16.

About That Job Offer…

Since the collapse of Lehman Brothers and the rushed sale of Merrill Lynch over the weekend, school career services officers have been busy reassuring students, reaching out to those who had job offers lined up with the firms and organizing campus-wide events to discuss the overall impact of the events on job prospects.

One thing is certain: Career services officers at business schools are bracing for rough waters ahead, said Kip Harrell, board president of the MBA Career Services Council, the umbrella group of school career placement officers in a Sept. 15 interview.

Students who interned at Merrill Lynch over the summer and received a job offer are among the more fortunate ones -- so far. Their jobs appear to be surviving Merrill's sale to Bank of America. "We are standing by all of our offers," said a spokesperson at Merrill Lynch on Sept. 16.

The outlook at other firms is not so clear. A spokesperson at Lehman Brothers declined to comment. A call to insurance giant American International Group, which faced failure until a government rescue plan was reached Tuesday night, was not returned.

Recruiting Nosedive

Deans of business schools are also preparing for tough times ahead. The new dean of the University of San Diego's School of Business Administration, David Pyke, is expecting recruiting by investment banks to take a nosedive this fall. "I think it's going to be bloody." But he said it will probably not hurt his school too much since few students go to Wall Street; most end up in corporate finance positions.

The schools likely to be hardest hit are those known for their strong finance offerings, where large investment firms like Lehman and Merrill have tended to recruit heavily. Mark Zupan, dean of University of Rochester's Simon Graduate School of Business, said he believes that the top five business schools, which are key feeders for top financial firms, will be the most impacted by the turmoil. "It's going to be a tough market for Wall Street-related jobs," Zupan said.

Second-Year Jitters

Indeed career services officers at those top-ranked schools said they are anxiously awaiting word from Lehman, Merrill, and AIG on whether or not they plan to honor the job offers they extended to second-year students, as well as their plans for fall campus recruiting.

"We don't know the impact yet on recruiting for second-year students," Julie Morton, associate dean for career services at the University of Chicago's Graduate School of Business said in an e-mail. "We do know that as of Friday afternoon the outlook was solid." Most of the Wall Street firms hire mainly from their internship classes, she added.

In response to student concern over the events, the University of Pennsylvania's Wharton's MBA Finance Club held an impromptu meeting on Sept. 16 led by some of the school's senior finance faculty, said Michelle Antonio, director of Wharton's MBA Career Management. Plans are also under way to hire more career services advisers to help students with their job hunt this year, Antonio said.

"In light of this weekend's events we are working in close collaboration with our partners in the industry to assess the current situation," Antonio said via e-mail. "Our office was already focused on current economic challenges and is in the process of adding three new positions to our staff to provide direct support to students and alumni."

Reaching Out to Students

At the University of Virginia's Darden School of Business, career services officers have spent Monday and Tuesday reaching out to students who worked at the beleaguered firms this summer, said Jack Oakes, director of Darden's career development center. The school has strong relationships with Lehman and Merrill, both of which have been "long-time recruiters" at the school, he said. He has not heard yet from recruiters at either firm, he said.

"There certainly will be a direct impact on students," Oakes said. "In fact, we're meeting with some of our affected students…to see what they've heard directly from the company, to hear their thoughts and concerns and advise them accordingly."

In the meantime, career services officers are advising students to cast a wide net as they conduct their job and internship hunts this fall, especially those who intended to go into investment banking. They should consider jobs in other areas of the financial services sector, such as corporate finance or internal auditing, and consider jobs at small boutique investment firms, said the MBA Career Services Council's Harrell.

"We're being very honest and upfront with our students," said Harrell, also the associate vice-president of Thunderbird School of Global Management's career management center. "They're asking lots of questions, but we're telling them that New York may not be the best place to look right now. For those counting on investment banking, they are going to need to beef up their plan B."

College Applicants, Beware: Your Facebook Page Is Showing

High-school seniors already fretting about grades and test scores now have another worry: Will their Facebook or MySpace pages count against them in college admissions?

A new survey of 500 top colleges found that 10% of admissions officers acknowledged looking at social-networking sites to evaluate applicants. Of those colleges making use of the online information, 38% said that what they saw "negatively affected" their views of the applicant. Only a quarter of the schools checking the sites said their views were improved, according to the survey by education company Kaplan, a unit of Washington Post Co.

Some admissions officers said they had rejected students because of material on the sites. Jeff Olson, who heads research for Kaplan's test-preparation division, says one university did so after the student gushed about the school while visiting the campus, then trashed it online. Kaplan promised anonymity to the colleges, of which 320 responded. The company surveyed schools with the most selective admissions.

The vast majority of the colleges surveyed had no policy about when it was appropriate for school officials to look at prospective students' social-networking sites. "We're in the early stage of a new technology," Mr. Olson says. "It's the Wild, Wild West. There are no clear boundaries or limits."

The lack of rules is already provoking debate among admissions officers. Some maintain that applicants' online data are public information that schools should vet to help protect the integrity of the institutions. Others say they are uncomfortable flipping through teenage Facebook pages.

Colleges' recent interest in social-networking sites is leading many aspiring students to take a hard look at their online habits and in some cases to remove or change postings. With a high-school graduating class nationwide of 3.3 million students, colleges are expected to be sifting through a record number of applications this year.

Nicholas Santangelo, a senior at Seton Hall Prep, a private school in West Orange, N.J., says he expects colleges might look at his Facebook site but hopes admissions officers realize the postings reflect only a partial view of any student. "There are some things I might think about getting rid of," says Nicholas, 17, who is considering such competitive schools as Amherst College and Wesleyan University.

Sites like Facebook and MySpace let users set up online profiles -- including pictures, videos and other personal information -- then solicit others to join their network of online "friends." Users can exchange messages, often publicly, and sometimes offer detailed descriptions of their activities, dreams and fears.

The sites have inspired many a national conversation over privacy and exhibitionism. Some job applicants have already discovered the hard way that employers often examine the sites to weed out candidates. Representatives of the sites say users can establish online privacy settings that let their pages be viewed only by invited "friends." MySpace is part of News Corp., which owns The Wall Street Journal. Facebook is closely held.

But Kaplan and many high-school guidance counselors say students often don't restrict public access on social-networking sites and, in any case, damaging information can find a way to leak out. David Hawkins, director of public policy and research for the National Association for College Admission Counseling, a professional organization, says schools don't have time to scour the Internet systematically to check out thousands of applicants. But he says admissions officers at times receive anonymous tips, which may be from rival applicants, about embarrassing Facebook or MySpace material, such as a picture of a student drunk at an underage party.

In another recent study, Nora Ganim Barnes, director of the Center for Marketing Research at the University of Massachusetts at Dartmouth, found that 21% of colleges used social-networking sites for recruiting prospects and gathering information about applicants. It's especially common when universities are awarding scholarships because it isn't hard to go online for a handful of finalists. "No one wants to be on the front page of the newspaper for giving a scholarship to a murderer," she says. "Everybody is trying to protect their brands."

Thomas Griffin, director of undergraduate admissions at North Carolina State University in Raleigh, says the school will do an Internet search, including Facebook and other sites, if an application raises "red flags," such as a suspension from school. Mr. Griffin says several applicants a year have been rejected in part because of information on social-networking sites. In a recent case, the university researched a student who disclosed on his application that he had been disciplined for fighting. The school found a Facebook page with a picture of the applicant holding a gun. "We have to use this information to make the best decision for the university," Mr. Griffin says.

Janet Lavin Rapelye, dean of admission at Princeton University, says the school hasn't rejected any applicant because of information posted on the Internet. Princeton doesn't have time to look at all applicants' online information, but if an offensive Facebook post came to the college's attention, the school would examine it, Ms. Rapelye says. "All of us would consider anything that would cause us to doubt a student's character," she says.

Greg Roberts, senior associate dean of admission at the University of Virginia, says his staff is free to check out anonymous tips about social-networking sites or make use of the information if the admissions committee is evaluating a "tight" decision.

Sandra Starke, vice provost for enrollment management at the State University of New York at Binghamton, says she instructs her staff to ignore Facebook and other sites because she considers postings to be casual conversations, the online equivalent of street-corner banter. "At this age, the students are still experimenting," she says. "It's a time for them to learn. It's important for them to grow. We need to be careful how we might use Facebook."

Marc Prablek, a senior at Ladue Horton Watkins High School in suburban St. Louis, considers Facebook information "out in the public" and fair game for colleges. The 17-year-old, with some 550 "friends," says, "I don't have anything bad on Facebook," but he may tweak his profile to be "more sophisticated."

Marc, who plans to apply early to Stanford University, says he won't mention that he loves to read X-Men comic books. His Facebook literary picks currently include "Crime and Punishment" and "Pride and Prejudice."

High-school guidance counselors advise applicants, even if they restrict public access on their sites, to refrain from including anything that could hurt them in college admissions. They especially caution against foul or offensive language, nudity, or photos of drinking and drug use.

"Students need to be accountable for their actions," says Scott Anderson, director of college guidance at St. George's Independent School, a private school near Memphis, Tenn. When writing on Facebook or MySpace, he says, they should be thinking, "Is this something you want your grandmother to see?"

College Savers Stuck in Stocks as Market Falls

IRS Rule on 529 Plans Allows Just One Portfolio Shift a Year; Weighing a Cheaper School

A rule designed to protect investors in 529 college-savings plans is having the unintended side effect of preventing them from shifting to more-conservative investments as the stock market swoons.

When Charles Strawbridge of Ashtabula, Ohio, got nervous about the markets this past spring, he wanted to boost the bond allocations in the 529 plans he had set up for his 16- and 19-year-old sons. But because he and his adviser, Matt Olver of Cleveland, had already changed his investment mix in January, he had to keep his current allocation of 20% and 25% in equities for his older and younger sons, respectively.

Now, after watching the accounts drop in recent weeks, he's telling his older son -- who is in the process of transferring colleges -- to consider less-expensive schools. "We do have to keep in mind the downturn that the market has had on his available funds," says Mr. Strawbridge, a 55-year-old accountant. "It was unfortunate that we couldn't have made the move. It takes a little bit off the table."

With 529 plans, investors put after-tax dollars into an account that typically offers a range of mutual funds and other investments. Distributions and earnings are tax-free, as long as they're used for higher education. The plans have grown in popularity in recent years -- they held about $110 billion in assets at the end of the second quarter -- although the pace of net new investments into the plans has started to slow, according to Citigroup Inc.'s Financial Research Corp..

Amid the current market turmoil, more investors like Mr. Strawbridge are running into one of the quirkier restrictions of these state-sponsored plans: an Internal Revenue Service rule that limits investors to one investment change per calendar year. The rule is intended to keep people from making knee-jerk reactions to market moves, but some investors and financial advisers say it makes the plans overly restrictive. Indeed, the College Savings Plan Network, a membership organization of state 529 officials, investment firms, program managers and others, is considering asking the Treasury Department to raise that limit to four times a year.

But that's not the only feature of 529 plans that's causing investors grief right now. Many investors use age-based portfolios that automatically shift to more conservative investments as the child nears college. Yet some of these conservative portfolios may actually hold a high percentage in stocks. North Carolina's National College Savings Program has an age-based portfolio that can hold just over 50% in stocks, including real-estate securities, just one year before the child starts college. That portfolio, which is part of the state's CollegeHorizonFunds managed by J.&W. Seligman & Co., was down 15.7% for the 12 months ended Sept. 30. Given the big market drops this month, the plan has likely posted additional losses.

Seligman's age-based portfolios were designed to create "the opportunity for capital appreciation" while becoming "extremely conservative" in college, says Charles Kadlec, the firm's managing director. The CollegeHorizonFunds move to 100% cash in the last two years of college, he says.

Other plans with more-aggressive portfolios include Nebraska's broker-sold AIM College Savings Plan, which can have as much as 40% in equities when the child is one to three years away from college, and South Carolina's Future Scholars direct-sold plan, which can have up to 33% in equities with college enrollment one to two years away.

Keeping Pace With Tuition

Such equity exposure may help investors keep pace with tuition increases, some investment managers say. "If you're a senior in high school, you still have five years before you hit your senior year of college," says Tom Kazmierczak, senior product manager for T. Rowe Price Group Inc.'s 529 unit, whose portfolios for students starting college in 2009 can hold up to 28% in stocks and up to 20% while the child is in college.

But the market is proving to be too nerve-wracking for some investors. After watching her 529 college savings plans fall by about 20% in recent weeks, Jeanine Clark of Poway, Calif., is considering pulling money out of the plans altogether -- even though she would get hit with taxes and penalties. "I can't afford to lose it all," says the 43-year-old physical therapist, who has close to $200,000 invested in two Nevada 529 plans for her 6- and 14-year-old sons.

Ms. Clark's financial planner, Mary Van Nostrand of San Diego, says she moved many of her clients with other types of accounts into conservative investments in recent weeks. However, she decided not to do so with Ms. Clark because the restrictions in the 529 plan meant Ms. Clark wouldn't be able to switch back into equities until next year, and thus would miss out on gains if the market bounced back in that time.

"If you're trying to avoid some of the craziness that's going on in the markets right now, you're kind of stuck," says Ms. Van Nostrand.

Executive directors for the Virginia, Ohio and Utah 529 plans say they're seeing a jump in the number of account holders who are switching their investments to safer investments such as certificates of deposit, stable-value funds or money-market funds. The Utah Educational Savings Plan received more changes last week than it typically processes in a given month, says Lynne Ward, the plan's director. TIAA-CREF, which manages eight state 529 savings plans, says it is seeing similar trends, especially with account owners who have kids close to college age.

Paring Back Equities

Families who are planning to tap their funds in the next year or two should be looking at paring their equity exposure and transferring their money to more conservative assets, say financial planners. Some plans, such as Ohio, Montana and Arizona, offer CDs as investment options. Others may want to move their savings to a "prepaid" 529 plan, in which families can lock in current tuition rates, says Fred Amrein, a financial planner in Wynnewood, Pa. He has been transferring some of his clients' investments to Pennsylvania's guaranteed savings plan, which resembles a prepaid plan.

The market turmoil is hitting families with children who are juniors and seniors in high school the hardest, since there is less time to make up the losses. In those cases, investors may have to delay, if possible, tapping their plans until the child is in their third or fourth year of college, says Jason Cole, a financial planner at Abacus Wealth Partners LLC in Philadelphia. Parents can also use the funds for graduate school or change the beneficiary to a younger sibling, he says.

On the other hand, investors with younger children may want to boost their equity allocation to take advantage of lower prices. T.J. Kohler of West Bloomfield, Ind., says that while his plans are down about 30%, he has boosted his contributions for his 4-, 3- and 1-year-olds, since they are years away from needing the money. "Ten years from now, this will be a blip in the marketplace," says the 35-year-old software engineer.

Investors can also get around the once-a-year investment restriction by changing plans or switching beneficiaries. And since the limits apply only to money that has already been invested, savers can always redirect how their future contributions are invested to gradually change their allocation.

Those investors whose 529 plans are "under water" -- that is, whose value is less than what they've put in -- could completely cash out of the 529 plan without paying federal taxes and penalties no matter what they use the money for, since federal taxes and penalties are assessed only on earnings, says Mr. Olver, the financial planner. Investors can also claim the loss as a miscellaneous itemized deduction, though they may be hit with state taxes, says Joe Hurley of Savingforcollege.com.

Paul Saam of Austin, Texas, says that while his two 529 savings accounts are down by about 20%, he's not overly worried. "With two kids under two, I'm not too concerned about how the market affects their college savings," says the 33-year-old, who works at a medical-devices company.

Still, he says the lack of flexibility with the plans is a "little bit frustrating. When you're tied down to one change a year, it's a little scary. The market downturn made me think about asset allocation a little bit more than I had before."