Colleges and universities are due for a meltdown as students are increasingly saddled with debt they can't repay, according to Mark Cuban, the billionaire owner of the HDNet cable-television channel.
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According to the Federal Reserve Bank of New York, the amount owed on loans for tuition and other educational expenses now stands at $867 billion. That exceeds the comparable totals for credit-card debt ($734 billion) and auto loans ($704 billion).
Student debt last year climbed 64 percent, the biggest increase since 2003, as tracked by the New York Fed. More than $1 trillion of loans are currently outstanding, according to the Consumer Financial Protection Bureau.
Borrowing to pay for higher education is ?the collegiate equivalent of flipping houses,? Cuban wrote two days ago on his blog. ?At some point, potential students will realize that they can't flip their student loans for a job in four years.?
For-profit education companies are among institutions at risk as students look to other schools, according to Cuban, who lives in Dallas and owns the Dallas Mavericks basketball team. He cited the University of Phoenix, run by Apollo Group Inc. (APOL), and Strayer Education Inc. (STRA)'s namesake schools in the posting.
Cuban received a bachelor's degree in business administration from Indiana University's Kelley School of Business in 1981. He went there because tuition was the lowest among top-10 business schools at the time, according to a story on Kelley's website.
--Bloomberg News--
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