Amid the increase in US student debt, much of the focus has centered on the ridiculous surge in tuition costs.
Rightly so, but the irate masses might look at another key cost of college: Books.
As Morgan Stanley points out in a note this morning (referencing a chart first put out by the American Enterprise Institute in 2012) inflation in college textbook prices is so bad it exceeds even the relentless rise in US medical services prices. (The chart they’re using is slightly dodgy, however, as it appears to blend college book prices—which the US Labor Department only began tracking separately in late 2001—with a longer-term data set of other book prices.)
Even so, the trend is clear. College textbook prices have more than doubled since December 2001, the first month data were broken out for college textbooks. Over the same period the overall consumer price level is up just 35%.
Help may be on the way. A range of new digital entrants are offering textbooks at much cheaper prices, or even for free. In the research note, Morgan Stanley analysts point to Boundless Resources, Flat World Knowledge, OpenStax and Bookboon as notable, would-be disruptors in college textbooks.
Such companies represent a major threat to textbook makers, such as the UK-based Pearson. (Pearson makes most of its money from its education unit, but is also known for publishing the Financial Times).
Pearson’s strategy in the textbook business has been to wean itself off of print and push digital-subscription packages. Over the long term, that cuts the cost of printing new books and restricts the ability of students to rent or buy used editions. But new entrants to the space are likely to keep the pressure on. And that would be a very good thing for consumers.