The billionaire owner of the NBA’s Dallas Mavericks says America’s colleges are in serious trouble and that over a trillion dollars in student loans will put many of them out of business, D.C. Clothesline said.
For years the U.S. government has been subsidizing loans, much like they did with houses ahead of the 2008 crash. This has led to increased tuition costs and lending to individuals who will more than likely never be able to pay back their student loans, the website said.
The end result, according to Mark Cuban, will be a bursting of the debt bubble, a significant drop in college tuitions, and an outright collapse of America’s institution of higher learning, the report said.
“College tuitions have exploded because of easy money guaranteed by Sallie Mae. So, if any student can borrow more and more money, and it’s guaranteed by the federal government, why wouldn’t the colleges take it all?” Cuban asked in a video posted on Inc.com.
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 in 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 can’t spend their money on, ” Cuban said.
“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 the same collapse in the price of student tuition and that’s going to lead to colleges going out of business, ” he said.