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Mark Cuban: Lower student debt to save the economy

Instead of taxes, jobs or government spending billionaire investor Mark Cuban said tackling the $1 trillion student debt crisis would be most effective in saving the U.S. economy.

The burden of loans is curtailing college graduates' purchasing power that could stimulate the economy, Cuban said at Inc.'s GrowCo conference.

"That's the same money that, when you graduated, you used to move out of the house or you went out and spent money that improved the economy and helped companies grow," he said.

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The best way to fix the student loan bubble is to limit the allotted amount of loans each student is allowed to receive each year to no more than $10,000, Cuban said, adding that a cap on student debt would force universities to lower tuition and curb spending.

Rising tuition costs don't help the economy as much as increasing students' purchasing power—a college may just use the extra cash to "build a better fitness center at your school."

Tuition revenue is "just easy money and easy money goes to a college administrators' head just as much as anybody else, Cuban said on CNBC's "Squawk on the Street" Monday.

Anytime you create easy money, you're gonna create a bubble or inflation and that's what's happening with college tuition, Cuban said.

Turning to the U.S. stock market, Cuban said market's trajectory isn't a reflection of the broader economy.

"There use to be a certain level of cause and effect that we all understood … now everyday it's a different guess," he said."The real problem is nobody understands what drives our market and because of that uncertainty, when something happens it happens fast."

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Watch Mark Cuban discuss his solution on Inc.