Mark Cuban: ‘I Think the Student Loan Bubble is Going to Burst’ | Inc. Magazine


College tuitions
have exploded because of easy money guaranteed
by Sallie Mae. All these student loans
getting guaranteed. And so if any student
or potential student can borrow more and
more money and it’s guaranteed by the
federal government, why wouldn’t the
colleges take it all? But the problem is that bubble
has led to over a trillion dollars in student
loan debt, which is having a significant
impact on the economy. And it’s really holding us
back and the economy’s ability to grow. It’s holding back housing. It’s holding back
apartment building. It’s holding back car sales. It’s holding back
clothing sales. Anything that’s not an absolute
necessity, kids coming out of school today can’t
spend their money. And I think that’s a real
problem for the economy. And I think that bubble
is going to burst. I think it’s inevitable
at some point there’ll 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 of 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.

56 thoughts on “Mark Cuban: ‘I Think the Student Loan Bubble is Going to Burst’ | Inc. Magazine

  1. "Problem is easy money guaranteed by Sally Mae….why wouldn't the colleges take it all". So the problem is not the colleges just taking all they can get but dumb lenders and students? A curious attribution of blame. I would think that colleges ratcheting up their costs – just because they can – is the principle cause of the problem requiring students to borrow so much. Greed.

  2. The collapse will lead to massive bailouts of the borrowers, the lenders and the financially troubled universities because…"women and minorities (blacks and hispanics) will be adversely affected".  It will simply become part of our ever increasing welfare state.  50 years, 15 Trillion dollars – has given us a poverty rate larger than what we had in 1965. Human nature, human sloth and the human genome: all of the money in the universe will not turn a pit bull into a border collie.

  3. I'd love to see some of these colleges go out of business. Can't believe how much tuition is nowadays. When I was in college back in 2000-2002, I think it was about $18/unit so math classes which were 3-4 units was $72 a class no counting books. I was thinking about going back to school recently and was talking to some girls that went to Cal State Long Beach and they said on average, it was now in the triple digits just for one unit. Over $100/unit?!?!?!? Are you fucking kidding me?!?!? Fuck these colleges and their tuition.

  4. When the average college coach makes over $1.5 million per year we have a problem and student loans are, in part, financing it.

  5. We are fundamentally shifting wealth and taxpayer money to liberal hotbeds.  We need to reform student loans.  Taxpayers need their money back.  Are we investing in loans that contribute to society or add to the burden?  Time for reform.  See Mike Rowe video on my page for part of the solution–emphasizing the trades. 

  6. He has a giantic whole in his logic.  He is not accounting for the fact that most colleges are publicly funded.  Even private ones get a huge bump from the easy student loans.  POTUS has even already floated forgiving loans.  Basically I can promise they will come up with the 1 trillion USD to bail out the colleges.   They already dumped 1 trillion in "Those shovel ready jobs"

  7. This guy is absolutely right… We have an education and for profit college system that pays no attention to the economy and job market statistics. These are two essential factors that play a role in keeping our civilization going, how can they just keep letting people apply and borrow money if it cant be payed back. They need to educate the borrowers so it should get out of hand like this.

  8. Maybe if the corporations that are giving college students money for majors like VISUAL FUCKING ARTS, PHOTOGRAPHY, and other USELESS BULLSHIT. I would agree for the government ONLY giving money to those students that have a potential of working in the government or students who are STEM majors and will actually help society somewhat.

  9. The thing is, you cannot default on student loans and declare bankruptcy. You still need to pay them back, and Sallie Mae and other organizations will take your paychecks to make sure they get their money back. Not even comparable to the housing bubble. 

  10. *From Mark Cuban's IAmA:*

    >If it were me and i were graduating from high school or close, i would be online taking as many of those MIT/Stanford classes that I could to push and challenge myself.

    >And of course to get the actual knowledge.

    >I would find an inexpensive university close by and work with them to have them help me create a program that leveraged those online classes with the classes i needed from the school to get the best education at the best price.

    http://www.reddit.com/r/IAmA/comments/15doqt/mark_cuban_this_is_my_ama/c7lkyps

    *Affordable College Textbook Act of 2013*
     
     "Washington, D.C.
    – The Scholarly Publishing and Academic Resources Coalition (SPARC) today applauded Senators Dick Durbin (D-IL) and Al Franken (D-MN) for introducing the Affordable College Textbook Act of 2013, which would reduce the cost of college textbooks by expanding the use of open educational resources – online academic materials that everyone can use freely."
     
    *Details About the Bill*
     
    The Affordable College Textbook Act directs the Department of Education to create a competitive grant program for higher education institutions (or groups of higher education institutions) to establish pilot programs that use OER to reduce textbook costs.
    Pilot programs may focus on using existing OER, creating or improving new OER, or conducting efficacy research – or any combination of these, so long as the end result is student savings.
     
    All educational materials developed or improved through the program will be posted online and licensed as OER so that everyone – including other colleges, students and faculty – can feely use the materials.
    The bill contains a strong definition of an open license with equivalent to the terms to the Creative Commons Attribution License, which grants full reuse rights on the condition of author attribution.
    This license would ensure the public gains the maximum benefit of the materials created through the grant program.
     
    sparc.arl/org/news/sparc-applauds-senators-durbin-and-franken-bill-make-college-textbooks-more-affordable

    It’s a start.

    American Council On Education Recommends Five Coursera Courses For Credit
     
    huffingtonpost/com/2013/02/07/ace-coursera_n_2639455.html

  11. One thing that is different is that many of those industries you mentioned, cars, housing, etc… Are pretty much completely discounting student loans when considering applicants for auto/housing/etc… loans. That's the big difference I see. Is there a problem? Yes. A big one. Is it going to result in a 2008 style clusterfuck? Probably not. At least not at that level. Everybody has student loans at this point. That's pretty much assumed. So we look at if they pay their rent, their car payments, their credit card payments. That's what's important, as opposed to the housing bubble where when that shit is on your record you are basically fucked for life. 

  12. Raise gov loans, tuition goes up. Raise more, tuition goes up more. It continuously angers me to see my university blowing money on 4 buildings and 2 garages in 2 years. I see all the professors show up in porsches/mercedes and I get to see my $250 class tacked on with a list of $1100 more complete bullshit fees. They had the seniors vote if we wanted a football team (tuition would go up). Obviously they voted yes because they wouldn't have to pay for it. These schools are run to screw the system as much as possible. I might as well take my highly subsidized student loans with low rates and start a business rather than listen to clowns read powerpoints.

  13. I wonder at what point people are going to realize that university is literally one of the worst "investments" you can ever make..

  14. First pattern for american destruction in finance was housing financial crisis after that shit was the oil problem with gas prices now student debt which is lasting the longest theres one more wave but i cant figure it out yet. But this was organized for sure.

  15. People have to realize that it isn't a right, but a privilege to go to college. It should be a should business/personal welfare decision. Do you really want to take on these massive loans? If so, is the juice worth the squeeze? There are many blue collar jobs that pay well that do not require a college degree. There are also tons of majors that cost 4 years of tuition in which there are little to/no jobs without experience (which you can't get if they don't hire you) or an advanced degree. I feel a lot of high school seniors aren't educated enough in this area of loans and jobs. They are just told go be whatever you want to be, even if that means taking on $100-200k in debt and having a completely different job than your major.

  16. Not many understand the game that the government and the fed play to profit from people,its a different bubble but same game,,,,why do you think they dont create more jobs?Its profit for them to crush people.

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  18. College is the new Vegas, "what happens there stays there." Because once you enter the real world you see that what college gave you doesn't apply.

  19. Please read "Why are only our children held accountable"
    http://projecttuitionreimbursement.com    and my new blog
    http://wherecanifindtheanswer  to  help explain until Congressional Political cronyism is taken out of our elections
    and our children student loan consumer protection rights are reinstated there will be no real solution the the $1.3 trillion student loan debt.

  20. While I agree with him about the student loan bubble and how it came about I don't entirely agree that students are putting off certain purchases.  Certainly housing suffers but I can't tell you how many of my millennial friends that have huge student loan debts that lease new vehicles.  This is not just anecdotal evidence either.  The numbers show that the fast growing generation in the leased car market is the millennials.  The crazy thing is they aren't just leasing Honda Civics and Toyota Corollas.  Some of the more popular leased vehicles among millennials are BMW's, Mercedes, Lexus, etc.  Many aren't in a position to buy a house because they have decided that driving a new luxury car is more of a priority.

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  22. I'm not buying a house anyways. I want to move into a brand new apartment every few years. I'll save for retirement but I'm spending everything else. If you don't have kids you don't have to worry about buying a house.

  23. '….Those who predict that student loans are a bubble about to pop note that the increasing cost of tuition and the increased debt load carried by students are similar to housing debts in 2007. But student loans are forever: unlike a house, a student loan can’t be abandoned. The students owe their soul to the company store. And the biggest cost of the student-loan fiasco may not be the crushing debt to the individual graduate but the deflation of that entrepreneurial spirit that distinguishes the United States from much of the rest of the world…."

    https://theamericanscholar.org/federal-student-loan-sharks/#.VsYH-vkrLBR

  24. there are other ways to deal with student debt, but the government needs to intervene. The job market is changing and western governments can't afford to discourage people from higher education. In 20-30 years automation will be so hectic nobody will be able to get a job without excessive education. Eventually we will need to adopt communism, not through ideology but necessity.

  25. Ok but what happens to the average student in debt then? Nothing just shackles for the rest of there lives

  26. “Colleges going out of business”

    No, the government will bail it out and the students will keep their debt. it’s very clear our government promotes people being in debt, tbh it’s a great model if you’re in the business of selling debt as income streams.

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