According to Mark Cuban, Hillary Clinton’s new college plan won’t reduce student debt; it will actually make college more expensive for students.
“In a word it’s backwards. It stands a better chance of increasing the amount of money students owe than decreasing it,” Cuban said.
The billionaire businessman and star of ABC’s Shark Tank sent out a blast via his CyberDust app, which was captured and reported on by The Federalist.
“Just as easy money led to the real estate bubble a few years ago, the easier it is to borrow money for college the easier it is for colleges to raise tuition,” Cuban wrote. “Tuition keeps going up because no matter how high they raise it, students can still borrow more to pay for it.”
Clinton’s “New College Compact” says students will never have to pay more than 10 percent of their income towards their student loans, and all loans will be forgiven after 20 years. Cuban applies the same logic to the real estate market.
“You can buy any house you want and you will never have to pay more than 10 percent of your income and after 20 years the mortgage will be forgiven,” he wrote. “If it’s under water before then, the person who sold you the house will pick up part of the cost. Think you might spend more on your next house?”
Cuban finds several other major faults with Clinton’s plan.
First of all, the plan doesn’t require any changes in how a school receiving funds operates, which means they will keep wasting money and raising tuition.
Cuban points out schools will keep spending billions on new buildings and perks they think will attract students and donors, which requires them to hire more administrators and raise tuition.
Cuban also says Clinton’s plan would lead to further decline in enrollment in liberal arts programs.
Part of the plan is to hold colleges accountable for graduates who are unable to get jobs and pay back their loans, by giving those schools less taxpayer money or forcing them to pay back money to the government.
According to Cuban, this may lead schools to eliminate majors that don’t pay graduates as well.
“Not everyone should be a STEM student or business major,” he said. “Not every company wants to hire only STEM and business graduates. There is a market for smart people with different perspectives.”
Cuban works with Paul Quinn College in Dallas, where he said between work-study and Pell Grants, the net cost to students is close to zero.
“They started using open source textbooks so kids didn’t pay outrageous prices for books,” he said. “They run their school like a business. They innovate. They see their cost model as a competitive advantage, and it is. They are the model for the future.”
Cuban added that he does like the idea of free community college.
“As long as we require colleges to take credits from those schools, the number of students who can get an education will grow and the arbitrage between the cost of community college credits versus college credits will force 4 year schools to be more competitive and cost effective in their offerings,” he said.
