Mark Cuban is explaining the student loan crisis better than most, and this video shows how the student loan bubble may burst.
In a related report by The Inquisitr , the debt levels of millennials have become overwhelming to the point that one Duke University student named Belle Knox became a porn star just to pay her bills.
Many economic experts fear that the student loan debt bubble could trigger another recession. Federal student loan debts account for over $1 trillion, which means student debt alone accounts for over six percent of the $17.6 trillion federal debt. If a large enough percentage of students default on their student loans, this could have catastrophic effects on the economy. This is similar to how the housing bubble bursting caused the Great Recession, but that financial crisis only involved $900 billion.
Mark Cuban would agree with this assessment:
“It’s inevitable at some point there will 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 housing, and we’re going to see that same collapse in the price of student tuition, and that’s going to lead to colleges going out of business.”
This is not the first time the Shark Tanker waded out into these waters. Cuban also addressed it in a 2012 blog post :
“When easy money stopped, buyers couldn’t sell. They couldn’t refinance. First sales slowed, then prices started falling and then the housing bubble burst. Housing prices crashed. We know the rest of the story. We are still mired in the consequences. Can someone please explain to me how what is happening in higher education is any different?”
To give you an idea why the student loan crisis is such a problem, consider the fact that the average college student graduates with around $30,000 in debt. This is about a third of an entry-level house mortgage in some states where real estate is cheaper. But if you thought the 2014 unemployment extension was a problem only for older generations, you might be surprised that the unemployment rate among the young hangs right around 13 percent.