In a clip on Inc.com, Cuban talks about the student loan bubble, which he says will burst and end badly for colleges.
The end of the student loan bubble, Cuban says, will be like the housing bubble, where tuition collapses the way the price of homes collapsed.
These collapses will put colleges out of business.
Cuban:
"It's inevitable at some point there will be a cap on student loan guarantees. And when that happens you're going to see a repeat of what we saw in the housing market: when easy credit for buying or flipping a house disappeared we saw a collapse in the price housing, and we're going to see that same collapse in the price of student tuition, and that's going to lead to colleges going out of business."
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11 comments:
Cuban is nuts. A smart billionaire businessman, but a nut.
That said, he is most likely correct. Tuition to public and private institutions has far outpaced wage growth for decades. It is simply not sustainable. I have friends coming out of grad school with over 300k in debt
He is absolutely correct 11:39 and if you don't think so you are grossly uninformed. It's not like it's rocket science or anything. Sallie Mae is experiencing the same thing as did Fannie Mae and Freddie Mac right before they collapsed.
A cap is probably the best way out of this. Right now, there's not much downward pressure on tuition. With a cap, the extra dollars above it are going to be riskier and less people will be able to take them on..so schools will have to fit tuition into that cap for most to stay full.
Oh NO!! No more McDiplomas! And another American idol comes crashing down...
The reason college costs have spiraled is because the government is involved. If student loans were not as easy to get colleges would have an incentive to be affordable.
It does not take a rocket scientist to figure this out. It just takes conservativism.
He is right in the fact that the bubble is gonna bust - but with that being said - No colleges will close - Can you say GOVERNMENT BAILOUT!!!!!
He's full of crap. The tuition will be forced down but none of these Universities is at risk.
Did you know that Harvard has about $28 billion in the bank?
that's $28,000,000,000.00
I don't think they're going broke anytime soon.
I don't get it....why not these people get jobs.....I worked and went to school ....I paid my tuition, books, and supplies.....I also paid rent, car payment, insurance....and so on ...and so on....I did graduate in 5 years....DEBT FREE! I had no student loans at all.....I busted my ass...for minimum wadge which was 5.25 per hr.....I worked in anywhere and everywhere I could to make another dollar to pay a bill....or was saving it for the next semester....These young people in most cases only care where the next party is ....what text message they might miss.....or when the club starts charging cover......they all feel "entitled" and that they are owed college....and owed a job, where because of his "Degree" he should start in the President chair....I have no sympathy for them.....They make their bills...they should have to pay their ways...
Many smaller colleges have already closed or plan on closing in the near future. Enrollment is dropping nationwide.
Close down liberal indoctrination centers? Good idea.
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