Economy

Mark Cuban: If You Lower Student Loan Debt, You Will Save the Economy

October 27th 2014

By:
ATTN: Staff

Mark Cuban is the latest to weigh in on America's student loan debt crisis. On CNBC this morning, he discussed America's one trillion dollars of outstanding debt, indicating that the likelihood of saving for cars, homes, or other important consumer goods becomes untenable with such high amounts of borrowing. 

His solution?

"You put a limit on the amount of money that any individual can borrow in a single year that's guaranteed by the government, and so right now, let's say you just put a cap.. today that starts today at $40,000 and then every couple years that number goes lower, you will see the Universities respond by cutting costs and reflecting that in their tuition... they won't have a choice," he said.

President Obama has proposed something similar in the form of a “college scorecard” that will rate colleges based on their debt levels and job placement statistics as opposed to prestige and marketing allure. Schools are frequently rated based on their selectivity or facility caliber (most notoriously via US News & World Report). Instead, the Department of Education would rank schools on questions such as, “how much debt does the average student leave with?” and “how well do those graduates do in the workforce?” Obama has even proposed limiting federal loans to collleges with low rankings on the scorecard. Interestingly enough, this program will not kick in until 2018 (after he leaves office), so it remains unclear whether the next President will implement this plan or whether college lobbyists will ultimately destroy the measure.

To learn more about other student loan reform legislation, click here.