Eric left this in the comment section, but I thought it worthy of its own post.  I concur with everything here except one:  My bet is that his kids will be ready a LOT sooner than he thinks.  Thanks for your thoughts on this, Eric.

On a personal level, when I started at the university in 1990 the cost was $16,000 per year. This year a freshman at that same university pays $52,000 per year. When compared to the rate of inflation (CPI), that $16,000 in current dollars is slightly more than $23,000. Why has tuition at my alma mater increased more than double the rate of inflation?

There is nothing conspiratorial about the education bubble and I’m not the only one aware of it. I stand with more influential folks like Peter Thiel of PayPal fame,

http://techcrunch.com/2011/04/10/peter-thiel-were-in-a-bubble-and-its-not-the-internet-its-higher-education/

Then there is Mish Shedlock at Global Economic Analysis who has blogged extensively on the subject.

http://globaleconomicanalysis.blogspot.com/2011/04/education-bubble-student-loan-debt.html

http://globaleconomicanalysis.blogspot.com/2010/03/debt-for-diploma-schemes-and-cookie.html

http://globaleconomicanalysis.blogspot.com/2010/03/for-profit-schools-turn-students-into.html

The reason we are in an education bubble is that tuition is highly subsidized by the federal government in the form of Pell and other grants to students. Secondly, tuition is subsidized by low interest long term loans to students. Thirdly, it is subsidized by similar loans to parents. Subsidies affect prices in the market place, and rarely to the downside.

I am very fortunate because my children will not start secondary education for several more years. I am pretty sure the education bubble will have burst by then. If it has not burst by then, I will encourage them to obtain an affordable education in the U.S. at a good state school. Another option is to encourage my children to go abroad for secondary education where they can literally get a fantastic education much less. For instance, Cambridge University in England is only $19,000 per year and Einstein’s alma mater, Swiss Federal Institute of Technology is a mere $750 per semester. The price is much lower & all that remains is academic barrier of entry. My kids would have a better education and resume, international experience with ZERO debt.