The billionaire owner of the 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.
For years the federal 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 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:
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?
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.
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.
Though going to college was a stepping stone for bigger and better things several decades ago, the notion that having a degree is the only road to success today is one of the largest scams in U.S. history:
College education is big business, and with easy Federal loans, prices for everything from tuition to text books is going through the roof. Once degreed, the majority of college grads are ill-equipped to handle the current marketplace. Many of those who entered college just five years ago simply can’t find work in a 21st century economy that’s imploding on all sides. What college grads are left with are massive loans that can’t be repaid and a room in mom and dad’s basement.
At one time, college was an investment. Today, it’s become indentured servitude.
For parents and teens looking at colleges, we suggest taking a close look at the amount of money that will need to be spent and borrowed, compared to the benefits that will come out of the degree pursued. Thirty years ago, a bachelor of business would have been a desired degree to hold. In an economy with over 20% unemployed, one must ask: how many business administration and management jobs will there be four or five years from now, especially if we continue to lose production capacity to cheap foreign labor.
A micro-documentary produced earlier this year by Crush The Street exposes the scam for what it is:
The government gladly invests taxpayer dollars into student grants and loans. This is what has been driving the increase in college tuition bringing it above and beyond the average student and family.
For teenagers the propaganda is so potent that high school students in many cases have blind optimism that they will land their dream career after college and have the income to easily pay off any loan balances occurred along the way.
Some graduates are left with over 100,000 in debt and can barely find any job, let alone the one they pictured themselves getting into four years ago.
We’re not suggesting that a college education isn’t worthwhile. But at current tuition costs those who lack practical skills for today’s economy once they get out of school will be left indebted, impoverished and living in mom’s basement for the majority of their working lives. That’s hard to believe for many future students of higher education but the fact is that nearly 85% of college graduates will return home jobless:
Saddled with debts that will take years to pay off, college graduates are finding it almost impossible to acquire any sort of meaningful labor in this much touted jobless recovery.
Though estimates vary, a recent study by Twentysomething Inc., a consulting firm specializing in marketing to young adults, predicted that of the 2 million graduates in the class of 2011, 85 percent will return home because they can’t secure jobs that might give them more choices and more control over their lives.
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