That’s what Glenn Reynolds says. Which requires some courage, given that he is a professor. I would have been skeptical, but this number does sound very much like a bubble:
College has gotten a lot more expensive. A recent Money magazine report notes: “After adjusting for financial aid, the amount families pay for college has skyrocketed 439 percent since 1982. … Normal supply and demand can’t begin to explain cost increases of this magnitude.”
Consumers would balk, except for two things.
First — as with the housing bubble — cheap and readily available credit has let people borrow to finance education. They’re willing to do so because of (1) consumer ignorance, as students (and, often, their parents) don’t fully grasp just how harsh the impact of student loan payments will be after graduation; and (2) a belief that, whatever the cost, a college education is a necessary ticket to future prosperity.
Bubbles burst when there are no longer enough excessively optimistic and ignorant folks to fuel them. And there are signs that this is beginning to happen already.
I have children in the relevant age group, and, for what it’s worth, it seems to me that kids are becoming more sensitive to college costs and more wary of debt.