Mark Cuban: Debt will destroy higher-ed system

MAY 20, 2012
By  Bloomberg
Colleges and universities are due for a meltdown when potential students decide they can't pay back astronomical loans, and desert the traditional higher-education system, according to Mark Cuban, the billionaire owner of the HDNet cable-television channel. According to the Federal Reserve Bank of New York, the amount owed on loans for tuition and other educational expenses stands at $867 billion. That exceeds the comparable totals for credit card debt ($734 billion) and auto loans ($704 billion). More than $1 trillion in loans are outstanding, according to the Consumer Financial Protection Bureau. Borrowing to pay for higher education is “the collegiate equivalent of flipping houses,” Mr. Cuban wrote last week on his blog. “You borrow as much money as you can for the best school you can get into and afford, and then you "flip' that education for the great job you are going to get when you graduate.”

ENOUGH, ALREADY

At some point, potential students will realize that they can't flip their thousands of dollars in loans for a job in four years, wrote Mr. Cuban, who owns the Dallas Mavericks basketball team. He predicted that “new, high-end, unaccredited, branded schools” will be started to supply education — especially in the tech world — that will translate into jobs after graduation. He did not have kind words for for-profit education companies that rely on easy-to-get, high-interest-rate student loans, including the University of Phoenix, run by Apollo Group Inc., and the namesake schools of Strayer Education Inc. Mr. Cuban received a bachelor's degree in business administration from Indiana University's Kelley School of Business in 1981. He went there because it had the lowest tuition among the top 10 business schools at the time, according to a story on Kelley's website.

Latest News

The fight over the CFPB is just beginning
The fight over the CFPB is just beginning

Locked out of their offices and told to stay home, employees at the Consumer Financial Protection Bureau have asked the courts to intervene as Elon Musk and Republican leaders move to shut down the agency that was established to protect people from predatory lending and financial scams.

Business-focused wealth tech RISR lands $8B Wealthcare Capital Management partnership
Business-focused wealth tech RISR lands $8B Wealthcare Capital Management partnership

Fintech platform interVal has also introduced a new feature to help advisors support entrepreneurial business owner clients better.

LPL boosts revenue potential with amped-up alts platform
LPL boosts revenue potential with amped-up alts platform

Along with greater revenue, alternative investments also carry risks, one industry lawyer noted.

How SageSpring Wealth Partners' next-gen strategy has fueled its success
How SageSpring Wealth Partners' next-gen strategy has fueled its success

President Jeff Dobyns unpacks the strategic power of mentorship, what makes an "ideal team player," and how the firm's 89 percent success rate has paid off for veteran advisors.

Powell heads for hot-seat hearings with ongoing pressure from Trump policies
Powell heads for hot-seat hearings with ongoing pressure from Trump policies

The Fed chair is in for some "hyper-charged" meetings, with legislators likely to raise questions on tariff threats and apparent steps to comply with anti-DEI orders.

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.