Summary of Subprime Goes to College

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In this 2010 US Senate testimony, Steven Eisman predicted what could become the next big financial bubble to burst: student loans. Eisman – an American money manager who famously made millions betting against subprime mortgages – argues that the extreme growth of the for-profit higher education industry, fueled by student loans, parallels that of the subprime mortgage industry whose collapse triggered the 2008 global financial crisis. His testimony ultimately spurred Department of Education reforms, serving as an important reminder of the power of government regulation to mitigate unchecked greed and its devastating economic impact. getAbstract recommends Eisman’s insights to those who want to understand the financial risks posed by for-profit education.

In this summary, you will learn

  • Why the for-profit education industry has exploded since 2000,
  • How it parallels the 2008 subprime mortgage crisis and
  • How to fix the education industry.
 

About the Author

Steven Eisman is an American money manager who became famous for making millions of dollars by shorting securitized subprime home mortgages.

 

Summary

The for-profit education industry in the United States has ballooned in recent years. Between 2000 and 2010, the industry grew “five to ten times the historical rate of traditional postsecondary education.” The George W. Bush administration unleashed this boom when it gutted many of the rules governing...

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