Mark Cuban Of ‘Shark Tank’ Explains How The Student Loan Crisis Will Destroy Colleges
In a related report by The Inquisitr, the debt levels of millennials have become overwhelming to the point that one Duke University student named Belle Knox became a porn star just to pay her bills.
Many economic experts fear that the student loan debt bubble could trigger another recession. Federal student loan debts account for over $1 trillion, which means student debt alone accounts for over six percent of the $17.6 trillion federal debt. If a large enough percentage of students default on their student loans, this could have catastrophic effects on the economy. This is similar to how the housing bubble bursting caused the Great Recession, but that financial crisis only involved $900 billion.
Mark Cuban would agree with this assessment:
“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.”
This is not the first time the Shark Tanker waded out into these waters. Cuban also addressed it in a 2012 blog post:
“When easy money stopped, buyers couldn’t sell. They couldn’t refinance. First sales slowed, then prices started falling and then the housing bubble burst. Housing prices crashed. We know the rest of the story. We are still mired in the consequences. Can someone please explain to me how what is happening in higher education is any different?”
To give you an idea why the student loan crisis is such a problem, consider the fact that the average college student graduates with around $30,000 in debt. This is about a third of an entry-level house mortgage in some states where real estate is cheaper. But if you thought the 2014 unemployment extension was a problem only for older generations, you might be surprised that the unemployment rate among the young hangs right around 13 percent.
The WSJ has been reporting this issue for some time now and it's a problem in our own back yard as well.
ReplyDeleteThe issue rests with this crazy notion that all should go to university and the cold hard facts are clear. The vast majority of young HS graduates have no business entering university because they simply do not have the intellectual capacity. Charles Murray reports that, at best, maybe 15% of any cohort is college ready.
Consequently millions leave these silly institutions buried in debt and many never get a degree. Most of the awarded degrees are meaningless because of grade inflation and useless majors. The financial aid counselors con these kids big time as well as the administrators at Party Hearty U. High schools are to blame as well because they gin up their % going to college because it helps their recruitment scams. Vocational training on the German model is the key to effective post secondary training. There are many schemes nationally that look interesting with JC/HS partnerships. One idea in our community would be to expand the AG. school programming to include marketable vocational training beyond Ag science. Stay away from the corrupt CCC system and work with the private sector. Emmanuel talks about something over at the Illinois Port Authority that might be a start because increasing the tonnage on the Calumet River is critical.
Those that are buried in debt your going to have to live with what amounts to a car payment for the rest of your lives. In the meantime get a credential that makes you employable.
I have no sympathy for the colleges. They just hike tuition to suck up all the student loan money they can. Remember when St. Xavier College had one building and two dorms?
ReplyDeleteSad, Xavives will be one of the first to bite the dust. I hope they are building up reserves.
DeleteI used to think Cuban was a big mouth jerk. He is telling the truth.
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