David Brooks makes several good points while asking the basic question of whether the cost of college is worth it. Money quote:
This is an unstable situation. At some point, parents are going to decide that $160,000 is too high a price if all you get is an empty credential and a fancy car-window sticker.
Of course, if you are pricing Duke University for little Johnny, you recognize $160,000 as a bargain (the cost of attendance for Duke is $59,343 for 2012-13; our expansive financial aid policies are contained in the link).
I think the practical definition of a bubble is people are rushing to desperately spend their money on something up until the moment where almost no one is willing (or able) to do so. You don’t really know it was a bubble until it pops, but you can likely get some hints. This chart from mymoneyblog may be a hint of sorts.
I have an 11th grader and now view college tuition from a slightly less theoretical perspective, and a month ago we went to New York City visiting colleges, and have since visited more, with more to come. At the first visit, a parent said her kids’ first choice was Duke, so I wasn’t about to identify myself as a professor at Duke, and I have discovered that answering the question, “what do you do?” by saying “I am a teacher” is a good neutral way to engage the other parents on college tours without being asked to write a letter of recommendation for a kid you have never met. Under this guise, it has been fascinating listening to the parents talk about what they expect in terms of student/faculty interaction. (The list of possible schools constructed by my daughter is nearly schizophrenic in terms of how different they are as institutions, but I have mostly been shutting up and trying to listen to her, with lots of encouragement along these lines from my wife).
We have visited small liberal arts schools and major research Universities. The oddest thing has been my general take that parents seem to expect the same type of interaction between students at professors at both types of institutions. I can see upsides of both types of schools, but both the amount and type of interaction between students and professors differs; they aren’t offering the same thing. When figuring out if something is “worth it” you need to understand what it is that you are about to purchase.