A recent Business Insider article had quoted current Dallas Mavericks owner, Mark Cuban, in regards to his thoughts on student loan debt. A rather extreme solution to the growing problem of student loan debt is for the government to ‘forgive’ some of that debt.
According to Cuban, however, that might be the WORST thing that could happen:
“Forgiving the debt is the worst thing you can do, because all it does is bail out the universities”
In regards to President Obama’s recent plan on lowering student loan debt, Cuban went on to say:
“The challenge is that you can’t subsidize or forgive existing debt without very strict rules. Otherwise it allows schools to tell future students not to worry. They too will get some portion forgiven. Which in turn gives the school more leeway to raise tuition.”
While Cuban seems to be spot on with his assessment of the situation, we would be curious to see what would actually drive the prices of colleges and universities lower. Potentially there is a case of too much supply and not enough demand here.