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



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 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.” 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.”