(Corrects to remove percentage figure in third paragraph and to revise the chart. Adds reference in third paragraph to data revision.)
May 15 (Bloomberg) -- 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.
As the CHART OF THE DAY illustrates, the amount owed on loans for tuition and other educational expenses exceeds the comparable totals for credit-card or auto debt, according to quarterly data from the Federal Reserve Bank of New York.
Student debt rose to $867 billion last year, according to the New York Fed, whose methodology for compiling the data was revised during the year. 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., and Strayer Education Inc.’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.
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