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Quitting college to start a firm is risky business

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More than half of current college students and recent graduates expect to make their first million by age 40, according to JobTrak.com. And some are ahead of schedule: They're ready to achieve their goal by starting a business, even if it means dropping out of school.

Enrollment in entrepreneurship courses at MIT surged by 221 percent between 1996 and 1998. The Collegiate Entrepreneurs Organization, which has chapters at colleges nationwide, reports that "hundreds" of students are actively involved, compared with a handful a year ago.

Today's students have an affinity for creating high-tech enterprises. With a computer and a modem the only equipment needed to launch a business, there are few barriers to entry. Even basic information about setting up a company is available on the Web.

And there's no shortage of cash to back them. Venture capital invested in start-ups soared from $19 billion in 1998 to $48 billion in 1999.

A small but growing group of undergraduates is abandoning school to launch a business, and even some educators can't fault them for leaving. But college dropouts who venture into the world of Internet start-ups gamble with their future.

Studies show that 24 percent of new ventures bite the dust in their first year; 52 percent are out of business by the second; and by the sixth year, 63 percent are has-beens.

Returning to school after a layoff isn't easy. In a 1999 study, the U.S. Department of Education found that only 23 percent of students who dropped out of a four-year college for a year or more had a bachelor's degree by their 30th birthday, compared with 70 percent of students who were continuously enrolled.

Of course, some failed entrepreneurs simply start another business. But if they want to work for someone else, not having a degree can slam the door to a better job and a higher salary. In 1998 college graduates ages 25 to 34 earned an average of $14,000 more per year than those without a degree.

Enterprising students may be able to run a business and get a degree at the same time. Some universities and private companies are establishing incubators for student-run businesses to provide essential services, as well as expertise in marketing, public relations and legal issues.

For example, the Rothman Institute of Entrepreneurial Studies at Fairleigh Dickinson University will soon launch a program in which undergraduates can get school credit for launching a company through the institute's incubator.