Barnes & Noble makes lots of money ripping off college students. Invest now!

The competition
The competition
Image: AP Photo/Bebeto Matthews
We may earn a commission from links on this page.

Barnes & Noble, the largest US bookstore chain, officially filed to spin off its higher education arm into its own company.

The decision allows for the bookseller to separate the successful Barnes & Noble College division, which operates more than 700 college bookstores nationwide, from the otherwise struggling chain. Over the past five years, Barnes & Noble College sales have held steady at around $1.75 billion annually, while total sales have fallen more than a billion dollars from 2012 to $6.07 billion this year, according to the company’s SEC filings.

Spinning off the college branch, which will be called Barnes & Noble Education, allows for the successful subsidiary to continue to expand and remain an attractive investment to investors who would otherwise be wary of the financial burdens of the parent company, or what CEO Michael Huseby calls an “industry-leading, pure-play public company.”

But the source of Barnes & Noble’s college divisions success is the well-chronicled exploitative practices of college bookstores and textbook publishing companies, whose books routinely cost hundreds of dollars, with some price tags even making their way into the four digits. As The Atlantic has noted, the price of college textbooks has risen by more than 800% since 1978, outpacing even the skyrocketing cost of college tuition.

US college students reported spending an average of $662 on textbooks during the 2012-2013 academic year, according to the National Association of College Stores. This was almost 10% of the average tuition at public four-year colleges that in-state students paid that year, as per the College Board (pdf).

In recent years, Barnes & Noble College and other college bookstores have faced increasing competition from Amazon as well as Chegg, a company that allows students to rent and sell used textbooks to each other. But publishing companies release new editions as frequently as possible in order to cajole professors to put the new, more expensive editions on their syllabi.

In a 2004 report, “Rip-off 101: How the Current Practices of the Publishing Industry Drive up the Cost of College Textbooks,” the authors found that, on average, an edition remain on the shelf for only 3.5 years before being updated, replaced, and pulled from the stock. Many of these updates are negligible, with more than half of professors surveyed responding that the revisions are “‘rarely to never’ never justified.”

For now, the old practice of ripping-off college students with expensive textbooks looks promising for the future profits of Barnes & Noble Education, which is even hoping to expand as more than half of college bookstores are still owned by colleges themselves.