Mark Cuban has made a strong statement about the increasing number of student loans. His statement clearly says, the student loans are exactly like the housing loan, and the bubble is no differentAccording to him, the student loan sharks are drowning not just the college students availing these loans, but also the economy.
He further affirmed that the student loans hold back the purchasing power of the students thus impacting the purchasing power of the economy as a whole, negatively. As per Cuban’s theory the easy and quick money loaned to students for higher students and education is no different than the policies that were used to encourage people to buy houses in the mid-2000s. The governmental policies back then had eventually led to a subprime crisis resulting in an economic meltdown, whole reverberations were felt the world over.
In his solution, Cuban intends to put a cap on the student loans which have now eclipsed a figure of USD 1 trillion. The intended cap is calculated to no more than USD 10,000 per year to every student. He says, this initiative will push the universities to lower the tuition cost, which in turn will improve student’s purchasing power.
The money earned via tuition has become the primary source of income for universities across nations. Sadly, most colleges are spending this money on spending spree, creating a bubble or inflation that is soon about to burst.