Dallas Mavericks owner Mark Cuban gave an interview to Inc. Magazine where he predicted the collapse of the student loan bubble.
The money quote, as transcribed by Mic:
“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.”
As Cuban and others point out, the failure to address these aspects will lead to diminished economic productivity in the long run, since young Americans have to spend a growing percentage of their income to service student loan debt.
When you factor in a high youth unemployment rate of 13.2%, you have an economic perfect storm that can decimate Millennials before they even get started.
President Obama has addressed the student loan crisis by targeting the symptoms: implementing measures to cap monthly payments, expand government grants and create tuition tax credits.
However, the President’s “solutions” do not get to the roots of the problem: the rising cost of tuition and the unending supply of student loans that are paying for it.