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The thing he is missing is that the tuition bubble (as he should more accurately call it) was directly caused by the housing bubble. Need to pay $200K for your kid's tuition to an ivy league? Take a second mortgage on your house. Universities were only able to charge these outrageous prices because people were willing to pay it. Now that nobody has equity in their homes any more you can expect it to change.

There are economic rules about supply and demand that come into play here. The supply of available seats in an ivy league are limited, and when credit or money is virtually unlimited, the pricing gets ridiculous.

We can expect this to adjust itself in the next few years provided not enough people are willing or able to pay these outrageous tuitions.




Look at that second chart more closely; the education cost bubble started about a dozen years earlier than the housing bubble. And home equity wasn't and isn't the only source of funding, especially for the less wealthy.

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