Mark Cuban: ‘Student Loan Bubble is Going to Burst’

In an interview with Inc.com, Mark Cuban, owner of the Dallas Mavericks, raised concerns about the $1 trillion collective student loan debt of the United States.

“College tuitions have exploded because of easy money guaranteed by Sallie Mae. If any student, or potential student, can borrow more and more money and is guaranteed by the federal government, why wouldn’t the colleges take it all?”

Screenshot via Inc.com
Image via Inc.com

The very same thing that happened with the housing crash of 2008 could very well happen in the university business as well.

Business Insider– Mark Cuban thinks colleges are going to go out of business.

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.”

Cuban also talks about the impact student loan debt is having on the economy, saying that people burdened with student loans can’t afford to spend money on anything other than the bare necessities.

There are a number of problems with the increasing cost of college both for the colleges themselves and the broader economy.

Cuban’s specific call for a cap on student loan guarantees, and a subsequent collapse in tuition prices, portends an ugly future for colleges in the U.S.

You can watch the full clip with Cuban here, via Inc.com.

Follow Seth on Twitter: @sconnell1776
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