Will for-profit universities be the next big short?

Readers of Michael Lewis' The Big Short are familiar with Steve Eisman, one of the few to see how the housing bubble would create a buying opportunity on the short side of the market.  Guess what?  Eisman has found another strong candidate for bubble-bursting: for-profit higher education.  Eisman gave a talk at an investment research conference last year where he laid out his case.  From his prepared remarks (link available on this page):

My name is Steven Eisman and I am the portfolio manager of the FrontPoint Financial Services Fund.   Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry.  I was wrong.  The For-Profit Education Industry has proven equal to the task.   

Here are the issues he sees: rapid growth in enrollment has been heavily subsidized by government-issued debt in colleges with high dropout rates and not-so-great job prospects for those who complete degrees.  Taxpayers ultimately end up bearing the risk once indebted students start defaulting on the loans. 

Eisman is hopeful that this train wreck will be slowed down by new regulations that make school eligibility for government loans contingent upon degree completion and gainful employment criteria.  Otherwise,

But if nothing is done, then we are on the cusp of a new social disaster.  If present trends continue, over the next ten years almost $500 billion of Title IV loans will have been funneled to this industry.  We estimate total defaults of $275 billion, and because of fees associated with defaults, for profit students will owe $330 billion on defaulted loans over the next 10 years.