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Subprime Goes to College

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Subprime Goes to College

Testimony Before the U.S. Senate Committee on Health, Education, Labor and Pensions

U.S. Senate Committee on Health, Education, Labor ,

5 мин на чтение
5 основных идей
Аудио и текст

Что внутри?

The for-profit education sector closely resembles the subprime mortgage industry that precipitated the 2008 financial crisis.

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Editorial Rating

8

Qualities

  • Eye Opening
  • Overview
  • For Beginners

Recommendation

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.

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 the higher education industry. These regulatory changes opened the floodgates to unrestricted growth, spurred by federal government funds in the form of student loans. Student loan money flowing to the industry exploded to more than $21 billion ...

About the Author

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

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