Maybe I should change the title of this blog to “Student ?
Loan Crisis” in place of “Discharge Student Loan.”
Mark Cuban up again, when the Breitbart.com site
picked up on his remarks on the student loan bubble:
\”Anything that causes lenders and service companies to act fairly is an efficient thing,\” Cuban said inside a statement to Business Insider about Obama\’s plan. \”The challenge is basically can\’t subsidize or forgive existing debt without very strict rules. Otherwise it enables schools to tell future students what you require. They too will get some portion forgiven. Which in turn gives the school more leeway to increase tuition.\”
This happens with what I call triangle transactions. ?The infant gets the student loan, but, the teachers gets the money.
Whether that loan is repaid soon or never.
And the taxpayer is liable for the student loans that do not get repaid.
Of course, one remedy is usually to force the colleges to own skin in the game, to make them repay some or each of the defaulted student loan debt.
After all, the colleges are the type of selling the benefits of the “education” you obtain with the student loan proceeds.
They should cash price for putting kids into degree programs that contribute only to unemployment.
Cuban goes on, making a similar points I have been making since before starting this blog:
Remember the housing meltdown ? Difficult to forget isn\’t it. The formula to the housing boom and bust was simple. Lots of easy money being lent to clients who couldn\’t afford the money these were borrowing. That money was then used on homes with the expectation that the expense of the home would go up and it could easily be flipped or refinanced with a profit. ?Who cares if you couldn\’t pay the loan. As long as prices continued going up, everyone was happy. And costs kept on going up. And as long as pricing maintained on going up real estate agents kept on selling homes and finding money for buyers.
Until the straightforward money stopped. ?When extra income stopped, buyers couldn\’t sell. They couldn\’t refinance. ?First sales slowed, then prices started falling and therefore the housing bubble burst. Housing prices crashed. Young children and can the rest of the story. We are still mired from the consequences.
Can someone please illuminate me how what is happening in higher education is any different?
Uh, no, i can’t, as it would be the same.
student loan bubble photo image: Dreamstime