What did Einstein mean when he said "Education is what remains after one has forgotten everything he learned in school?"

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That's a beautiful quote. Einstein did not enjoy school, and did not do well. Creative people often do not, because school is limiting. One of the primary functions of school is to socialize children to American societal norms. Children that don't conform to these norms often suffer. Einstein was never one for conformity. To me, this quote means that once a person leaves school and has learned the basics, his or her real, unencumbered learning can take place!
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I would say that Einstein is trying to tell us that public education does not necessarily promote learning. We tend to throw information at students and require them to memorize it for a test or event and then never use it again. In life's experiences we continually use what we learn and it becomes a natural part of our life, we have truly learned it.

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Einstein recognized, what many teachers recognize, the fact that public education does not always serve students in the best sense. This is not to criticize all of public education. To be fair, public schools, at least the ones in my state, are subject to mandated testing, so most of education relates to things they are required to be taught. This leaves little room to address the natural interests of many students. Einstein is simply saying that for many, life teaches better and more relevant lessons than public education.

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Einstein addresses the true meaning of education.  That is, learning is not simply the acquisition of knowledge.  As a matter of fact, the word education defines itself with its Latin root and prefix.  That is, the root word -duct- means movement [e.g. conduct], and the prefix e- means out of [e.g. exit, exeunt].  Therefore, when one becomes educated--truly educated not just in possession of a diploma--he/she has ventured down new avenues of thinking that have left a lasting effect upon the person.  People who have truly acquired an education will never been the same as that artless, unknowledgeable, and myopic person they were before.

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This quote refers most to life's experience.  Living life daily teaches us many useful things, and taking risks also brings with it a learning curve.  This is especially useful to people in trial and error type businesses...such as science and discovery...as you take what didn't work last time and make adjustments so that the next attempt is more successful.  Life is this way, too.  So, Einstein was commenting on what life (some call it the best teacher) gives us in the way of knowledge and experience rather than rote memorization or drills (the common practice when he was in school) or other activities which lack real-world applications.

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Einstein struggled early on in school, and of all subjects, in math!  His was a unique brilliance that didn't respond well to the public school system of his day, and I think he felt that it was too confining and rigid, and didn't allow for radical thought, even if it was very intelligent and rational.  You can imagine that some teachers then felt threatened by his brilliance (heck, I would!), so I don't think Einstein had a very high opinion of public schools.

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I sort of agree with the first post, but I think it is not so much that what life teaches you is better.  Instead, I think that he is saying that what we actually remember is the things that are most important to our particular lives.

When we are in school, we learn so many things that we would never be able to remember all of it unless we were to keep using it later in life.  We, as humans, don't typically seem to be able to simply remember everything we hear or read.  Instead, we only remember things that matter to us or that we use over and over.  For this reason, our education tends to consist of those things that we learn in ways other than through school books.

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