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Mark Cuban: Forgiving student loans is ‘bailout’ for universities

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Mark Cuban: Forgiving student loans is ‘bailout’ for universities
March 13, 2015
Victor Skinner

DALLAS – Dallas Mavericks owner and billionaire investor Mark Cuban is waving red flags at higher education, and he’s arguing against the idea to forgive student debt amid the current “student-loan bubble.”

“Forgiving the debt is the worst thing you can do, because all it does is bail out the universities,” Cuban recently told Business Insider.

Cuban’s comments come a week after Sweet Briar College announced it will close following the spring 2015 semester “as a result of insurmountable financial challenges,” according to the news site.

The closure is the latest in what Cuban calls a “student loan bubble” brought on by a cycle of ever-increasing tuition and student loans. Cuban, who bought collegedebt.com to keep tabs on student loan debt, believes it’s simply a matter of time before the benefits of higher education are outweighed by the costs.

“What you thought you were going to get in quality of life by going to that college,” he told Business Insider, “you’ve just undermined with the amount of debt you’re taking on.”

Collegedebt.com shows student loan debt in the United States currently totals about $1.3 trillion.

Cuban told Business Insider that an initiative laid out by President Obama this week to help students with federal student loans may have some merit, but cautioned against a college debt bailout.

“Anything that causes lenders and service companies to act fairly is a good thing,” he said. “The challenge is that you can’t subsidize or forgive existing debt without very strict rules. Otherwise it allows schools to tell future students not to worry. They too will get some portion forgiven. Which in turn gives the school more leeway to raise tuition.”

Cuban said he thinks a bailout would only exasperate the current situation.

After news of the Sweet Briar College closure last week, Cuban tweeted “this is just the beginning of the college implosion.”

“At some point,” he said, the student loan bubble is “going to pop.”

Cuban told Inc.’s GrowCo conference last year that if he was “running the economy, I’d go and say, ‘Sallie Mae, the maximum amount that you’re allowed to guarantee for any student in a year is $10,000, period, end of story,’” according to Business Insider.

“There’s all kinds of things that have been proposed to reduce existing student debt,” he said. “At some point, there’s got to be legislation where we put a limit on how much you can take out on a loan.”

https://eagnews.org/mark-cuban-forgiving-student-loans-is-bailout-for-universities/

5 thoughts on “Mark Cuban: Forgiving student loans is ‘bailout’ for universities

  1. And what about those of us who helped out children make a financially sound college decision.

    Why reward those who signed up for big loans and do not want to pay them back? That is not my problem. You bought an Audi when a Kia would have suited your budget. Either car will get you where you need to go..

  2. No to bailouts you borrowed the money get a goddamn job and repay it.

  3. And what about parents who helped with home equity loans? Who will be bailing them out?

    The government cannot fix bad financial decisions. There are students with 100k in loans. This means that they selected a private school when a public school would have done the job just as well.

  4. From US news college:

    Horseback riding is often a big part of student life at Sweet Briar College. Opportunities range from equine studies certificate programs to competitions, and the college has a 100-acre riding center and miles of scenic trails on campus. Students can also get involved in more than 45 ……

  5. Perfect example where govt has to step in to save people from themselves… Cuban is absolutely right… SLMA should cap at 10k and private lenders need to be brought to heel… maybe very limited forgiveness but stretching payments and cutting interest rates on the balance is a reasonable compromise… or aligning payments to income…. 100k for non marketable degrees is crazy and unfortunately the status quo in numerous cases …

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