I agree with everything he wrote, except for the predicted outcome. With the housing crisis, there was a bubble that burst because the credit markets froze and suddenly nobody had access to capital. That is what caused home prices to collapse. It wasn't that people suddenly realized that homes weren't a good investment.
With college, most of the loans are guaranteed by the federal government. Some are issued by the federal government. If there is a bubble, the fallout will be with the American taxpayers and not the colleges. Politicians can't (and shouldn't) allow universities to go belly-up. Recently there has been a backlash against traditional colleges, and much of that criticism is well-deserved. But the reality is that the U.S. has the greatest higher education system in the world. It is probably our single greatest competitive advantage. Mark Cuban talks a good game, but where does he think scientific research and development takes place? I can assure you it isn't the University of Phoenix.
If student loan debt continues to accumulate at the pace it has been, then the power will shift from the government to the students. What happens if tens of thousands of college grads simply cannot pay their debts or choose not to? After all you can't pay back money you don't have, and it's not as if there are tangible assets for the government to take. It's like the saying goes- if you owe the bank $1,000, you've got a problem. If you owe the bank $1,000,000, they've got a problem. The government has to start limiting these loans and the problem will correct itself. People should never be enabled to buy things they can't afford. Much of the housing crisis was caused because the government wanted everybody to own a home, and now the student loan crisis is happening because the government wanted everyone to attend college. But not everybody can own a nice home, and not everybody can afford to attend a college with $40,000 tuition.
With college, most of the loans are guaranteed by the federal government. Some are issued by the federal government. If there is a bubble, the fallout will be with the American taxpayers and not the colleges. Politicians can't (and shouldn't) allow universities to go belly-up. Recently there has been a backlash against traditional colleges, and much of that criticism is well-deserved. But the reality is that the U.S. has the greatest higher education system in the world. It is probably our single greatest competitive advantage. Mark Cuban talks a good game, but where does he think scientific research and development takes place? I can assure you it isn't the University of Phoenix.
If student loan debt continues to accumulate at the pace it has been, then the power will shift from the government to the students. What happens if tens of thousands of college grads simply cannot pay their debts or choose not to? After all you can't pay back money you don't have, and it's not as if there are tangible assets for the government to take. It's like the saying goes- if you owe the bank $1,000, you've got a problem. If you owe the bank $1,000,000, they've got a problem. The government has to start limiting these loans and the problem will correct itself. People should never be enabled to buy things they can't afford. Much of the housing crisis was caused because the government wanted everybody to own a home, and now the student loan crisis is happening because the government wanted everyone to attend college. But not everybody can own a nice home, and not everybody can afford to attend a college with $40,000 tuition.