The College Bubble: When Will It Pop?

Remember the housing meltdown? Really difficult to forget isn’t it. Well Mark Cuban (owner of the Mavericks) says that the formula for the housing bust matches what he is calling the college bubble.

The formula for the housing bust was simple

A lot of easy money being lent to buyers who couldn’t afford the money they were borrowing. Sound familiar? It should. But lets explain further.

The money in the housing bubble was spent on homes with the expectation that the price of the home would go up and it could easily be flipped or refinanced at a profit.  As Cuban says in his blog posts people were like

Who cares if you couldn’t afford the loan. As long as prices kept on going up, everyone was happy. And prices kept on going up. And as long as pricing kept on going up real estate agents kept on selling homes and finding money for buyers.

But everything changed when the money train stopped coming. The easy money stopped. When easy money stopped, buyers couldn’t sell which meant they couldn’t refinance. Slowly sales began to decrease, then prices started falling and then the housing bubble burst. Housing prices crashed. We know the rest of the story. We are currently living the rest of the story

Mark Cuban wants to know “How what is happening in higher education is any different?”

Its stupid easy get a loan for college.  Lets kick some numbers around that most people wont truely value till the shit hits the fan.

According to Mark, “The 37mm holders of student loans have more debt than the 175mm or so credit card owners in this country and more than the all of the debt on cars in this country. While the average student loan debt is about 23k. The median is close to $12,500. And growing. Past 1 TRILLION DOLLARS.”

That’s a lot of textbooks.

We freak out about the Trillions of dollars in debt our country faces. Maybe we should ask ourselves

What about the TRILLION DOLLARS plus in debt we as college students are facing?

What is Mark Cuban’s point?

Basically Mark feels getting a student loan way too easy.

The schools know this, and yet they are continuing to raise to tuition. Every year tuition goes up yet our education isn’t exactly improving. Sure we have better dorm rooms, Gyms, and basketball teams but are are we becoming anymore prepared for the work force?

Are we as student paying more but getting less?

Schools are doing the same thing real estate agents did before the housing bubble burst. Collecting easy money from students who can’t actually afford the education we are buying. It sounds like a sweet deal for the schools. But what about when it all comes crashing down?

The President has introduced programs that try to reward schools that don’t raise tuition and costs. They won’t work.

Right now we as students serve as the perfect customer. The system is designed so that we can’t really get high paying jobs with out a degree, but we also can’t afford our education and we have absolutely no control over the cost of it.

We are a never ending supply of buyers.

Going to college so that we can improve our quality of life according to Mark Cuban is the the collegiate equivalent of flipping houses.

We borrow as much money as we can for the best school we can get into and afford and then we “flip” that education for the great job we are going to get when we graduate.

“Except those great jobs aren’t always there. I don’t think any college kid took on tens of thousands of dollars in debt with the expectation they would get a job working for minimum wage against tips.” -Mark Cuban

Related: Amway vs College: 9 Most Common Questions

Mark Believes

At some point potential students will realize that they can’t flip their student loans for a job in 4 years. In fact they will realize that college may be the option for fun and entertainment, but not for education. Prices for traditional higher education will skyrocket so high over the next several years that potential students will start to make their way to non accredited institutions.

“While colleges and universities are building new buildings for the english , social sciences and business schools, new high end, un-accredited  , BRANDED schools are popping up that will offer better educations for far, far less and create better job opportunities.

As an employer I want the best prepared and qualified employees. I could care less if the source of their education was accredited by a bunch of old men and women who think they know what is best for the world. I want people who can do the job. I want the best and brightest. Not a piece of paper.”

The Higher Education Industry may just go the way of the Newspaper industry if it doesn’t rapidly change it’s business model.

For the full article The Coming Meltdown in College Education & Why The Economy Won’t Get Better Any Time Soon

Student Loan STD’s – CollegeHumor

Maximillian Garland| Bright Futura Columnist

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