Just a thought from something I read yesterday with regards to “the education bubble”.

Here’s the quick and dirty: When indexed to inflation, student tuition costs in higher education have far outpaced both housing prices and medical spending (as well as CPI).  What happens when the bubble pops?

Says University of Tennessee blogger, author, and law Professor Glenn Reynolds:

It’s a story of an industry that may sound familiar.

The buyers think what they’re buying will appreciate in value, making them rich in the future. The product grows more and more elaborate, and more and more expensive, but the expense is offset by cheap credit provided by sellers eager to encourage buyers to buy.

Buyers see that everyone else is taking on mounds of debt, and so are more comfortable when they do so themselves; besides, for a generation, the value of what they’re buying has gone up steadily. What could go wrong? Everything continues smoothly until, at some point, it doesn’t.

Yes, this sounds like the housing bubble, but I’m afraid it’s also sounding a lot like a still-inflating higher education bubble. And despite (or because of) the fact that my day job involves higher education, I think it’s better for us to face up to what’s going on before the bubble bursts messily.

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.”

Note that the education bubble dwarfs the housing bubble when indexed to CPI, via University of Michigan Professor Mark J. Perry at his blog, Carpe Deim:

[The above chart] shows the housing bubble in the U.S., using monthly median new home prices (Census data here) and the monthly Consumer Price Index (CPI, data here), back to 1978, where both series are adjusted to equal a value of 100 in January 1978.  The bottom chart illustrates a much, much bigger bubble than the real estate bubble - the “higher education bubble” – based on an annual comparison of the CPI, median new home prices and the CPI for “College Tuition and Fees” (data here).  Note that the housing bubble resulted from about a 4-time increase in home prices between 1978 and 2006, and college tuition has now increased by more than twice that amount since 1978 – it’s gone up by more than a factor of ten times.  The college tuition bubble makes the housing price bubble seem pretty lame by comparison.

When the ‘education bubble’ pops, as all bubbles do, what kind of shape will the Education Industry be in?  Have the prices of goods and services (textbooks, rents, food plans, etc.) trended closer to CPI or tuition cost?  Can Universities justify their rents and services when pressure comes to rollback pricing?   What happens if student loans begin defaulting, much like buyers are defaulting on mortgages?  What happens to graduate entering a jobless recovery while being ‘upside down’ in their educations?

If you run on nothing, you’ll receive a mandate to do just that.

– Andrew G. Biggs (Republican), on GOP

By preventing this mosque from being built, America is doing us a big favor. It’s providing us with more recruits, donations, and popular support.

– Taliban operative Zabihullah (Newsweek)

Even before a word was spoken — let alone the eloquent words that have echoed down through history — it had become absolutely evident from the people themselves that achieving civil rights would be the way to heal, not damage, the country.

I went back to [my office] wondering what it was we had been afraid of. And I’ve remembered this many times since, when people have tried to teach us to fear certain things, such as someone else’s marriage or place of worship.

– David S. Broder, recalling his experience in the crowd that witnessed MLK’s “I Have a Dream” speech (Washington Post)

10. U.S. Middle East Peace Talks: Wrong Approach to Region? — Tony Karon
9. The Surveillance State Thrives on Fear — Glenn Greenwald
8. Iraq Special Report: “American Soldiers Sacrificed a Lot. But We Sacrificed More.” — Jonathan Steele and Obama Plays Down Plan for Post-2011 Iraq Troop Presence — Gareth Porter
7. Enrichment Still the Key to Nuclear Diplomacy with Iran — Flynt Leverett & Hillary Mann Leverett
6. Is Congress Subsidizing Slackers? — Ruth Marcus
5. Book Notes: Ramos’s “A Country for All” — Bryce Covert and Fact-Checking the Claims about “Anchor Babies” and Whether Illegal Immigrants “Drop and Leave” — PolitiFact
4. The Digital Surveillance State: Vast, Secret, and Dangerous — Glenn Greenwald
3. The Myth of the Social Security System’s Financial Shortfall — Michael Hiltzik
2. Filibusters and Arcane Obstructions in the Senate — George Packer
1. News at 11: How Climate Change Affects You — Amy Goodman and Media Wakes Up to Hell and High Water: Moscow’s 1000-Year Heat Wave and “Pakistan’s Katrina” — Joseph Romm
BONUS: American Dream Needs a Redesign — Anthony W. Orlando

10. Balanced Budget Amendment a “Phony” Deficit Solution — Bruce Bartlett
9. What About Germany? and Angela and the Fifty Hoovers — Paul Krugman
8. Why Small Businesses Aren’t Hiring — Scott Shane, Young Firms, Not Small Ones, Are the Engines of Job Growth — John C. Haltiwanger, Ron S. Jarmin, & Javier Miranda, and Misrepresenting the Bush Tax Cuts, or the Return of Death Panels — Howard Gleckman
7. A Filibuster Fix — Norman Ornstein
6. Matters to Consider Before Launching Another War — Gary Hart and Two Minutes to Midnight? — Tony Karon
5. Petraeus’ Dubious Strategy in Afghanistan — Christopher Layne
4. The Taylor Rule and the “Bond Bubble” — Paul Krugman
3. Dear Rev. Graham: Obama Was Not Born a Muslim and Neither Is Anyone Else — Juan Cole and The Ground Zero Mosque and Cognitive Biases — William Easterly
2. The Surveillance State Thrives on Fear — Glenn Greenwald
1. Iraq Special Report: “American Soldiers Sacrificed a Lot. But We Sacrificed More.” — Jonathan Steele and Obama Plays Down Plan for Post-2011 Iraq Troop Presence — Gareth Porter
BONUS:  Sigmoidoscomy: The Colonoscopy’s Cheaper, Equally Effective Predecessor — Jason Shafrin

In November 1967, Martin Luther King Jr. announced his last campaign.

He was tired and depressed, but he felt he had one more obligation: to fight against economic inequality and poverty. He called it the “Poor People’s Campaign.”   Read more…

Carve out 15 minutes and read two things:

1. “I Have a Dream” by Martin Luther King, Jr.
2. “Self-Proclaimed Civil Rights Leader Glenn Beck’s History of Racially Charged Rhetoric” by Media Matters

One will make you teary-eyed. The other will make you nauseous.

Don’t they know that doing bad to someone, even if they did bad to you, is wrong?

– Rev. Lynn Litchfield’s 5-year-old daughter, upon learning what capital punishment is (Newsweek)

I won’t say I’m finally settled in Los Angeles, but…almost. Let’s just say my moving experience has been, well, an experience. We’ll blame the dearth of blog posts on the unnamed fellow who stole the modem outside my apartment building.

To get us back in the proper mood, here’s one of the greatest living comedians, Stephen Fry, formerly of the famous British duo “Fry and Laurie.” If you’ve only experienced Hugh Laurie as Dr. Gregory House, you’re in for a wonderful surprise: