Bubble Alert: College Textbooks

The chart above shows the percent changes since 1978 for the CPI series “Educational Books and Supplies” (which is mostly college textbooks), the CPI series “Medical Services,” the median price for new homes from the Census Bureau, and the CPI series “All Items.”  The 812% increase in the price of college textbooks since 1978 makes the run-up in house prices and housing bubble (and subsequent crash) in the 2000s seem rather inconsequential, and  the nine-fold increase in textbook prices also dwarfs the increase in the cost of medical services over the last three decades.  Compared to the 250% increase in the Consumer Price Index (CPI) over the last 34 years, college textbooks have risen more than three times the amount of the average increase for all goods and services.

Just like the ongoing home price increases and housing bubble of the last decade were unsustainable, there is now  growing evidence that rising college textbook prices and the “college textbook bubble” are also unsustainable, especially because of the growing number of low-priced and even free alternatives to over-priced $200-300 college textbooks.  The textbook alternatives are part of the growing “open educational resources” movement, which is “terrifying” the college textbook cartel, according to a recent Slate article titled “Never Pay Sticker Price for a Textbook Again.”

The Slate article features the free textbook alternative “Boundless Learning,” which was the focus of aCD post about a month ago.  Here’s an excerpt from the Slate article:

The Internet has made access to many kinds of information more flexible and less expensive. Novels, films, songs, photographs—all manner of things can be gotten from a broad array of providers for low prices, or for free, in digital form. Creators and distributors of intellectual property have struggled to balance the erosion of old business models with opportunities to sell their products in new and interesting ways.

Yet the college textbook industry has not only managed to insulate itself from this trend—it has moved in the opposite direction, using digital content as a way to charge more money. Add-on software gets packaged with physical textbooks and often has an expiration date, undermining the resale market for books. Students and parents pay the price, which often gets added on top of increasingly onerous student loans.

Now a startup called Boundless.com is trying to change that with a service it calls “textbook replacement.” Over the last decade, a great deal of academic content has been made available on the Internet, for free. The open educational resources (OER) movement has produced high-quality texts, videos, charts, problem sets, and other useful content in a huge array of subjects. Some of the authors are college professors who want to share their work at a larger scale; others are sponsored by nonprofits promoting education in the developing world that embrace the ethos of the open Internet.

Bottom Line: In the face of increasing competition from the “open educational resources” movement, the traditional college textbook model will likely suffer the same fate as the traditional encyclopedia when it was challenged by Wikipedia.

*Post courtesy of Mark J. Perry at Carpe Diem.