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- Lucas: If you are heading back to campus this fall, or sending a kid who is, you have probably braced yourself for a painful textbook bill. The stereotype — a single biology tome that costs four hundred dollars — has been real for a long time. But something interesting happened over the past few years. The price of college textbooks actually started falling. Luna: Wait — falling? I feel like every back to school story I have read for the last decade was about textbook prices rising way faster than inflation. Lucas: They were. For years, textbook prices grew at roughly triple the rate of overall inflation. The Bureau of Labor Statistics tracked a cumulative increase of over 180 percent between 2000 and 2020. But then the trend broke. Since 2019, the CPI component for college textbooks has declined about 8 percent. Luna: Eight percent down, while everything else was going up. That is a serious reversal. What changed? Lucas: A few things converged. First, the rise of open educational resources — OER — which are free, openly licensed textbooks. Initiatives like OpenStax from Rice University have saved students an estimated two billion dollars since 2012. Second, digital rentals and used-book marketplaces really matured. And third, the major publishers — Pearson, McGraw Hill, Cengage — finally started shifting from the thousand-dollar hardcover model to subscription-based digital access, often for forty to sixty dollars per course per semester. Luna: So the market actually responded. That is rare in higher education. But does that mean the average student is really paying less? Or are the savings concentrated among the students who know to look for the cheap option? Lucas: Good question. The aggregate data shows a clear downward trend in average spending per student. The College Board estimated that the typical undergraduate spent about four hundred and fifteen dollars on course materials in the 2020-2021 academic year. By last year, that number had dropped to around three hundred and thirty dollars. That is about a 20 percent reduction in real terms, and that is before you factor in wage growth. Luna: And wage growth has been real. Average hourly earnings hit thirty-seven sixty in June, up from about thirty-five dollars three years ago. Lucas: Exactly. So the combination — textbook prices falling, wages rising — means that a student working a part-time job this fall needs fewer hours to cover their books than they would have five years ago. In 2019, the median weekly earnings for a part-time worker were about five hundred and sixty dollars. A typical textbook bill of three hundred and eighty dollars meant about two-thirds of a week's pay. Today, median weekly earnings are around six hundred and twenty dollars, and that textbook bill is closer to three hundred and thirty. So it is about half a week's pay. Luna: Half a week versus two-thirds. That is real progress. But I remember my own textbook bill as a sophomore — I had a single chemistry book that cost two hundred and fifty dollars used. I wonder if the savings are hitting the hardest at the most expensive courses, like STEM, where the big publishers dominate. Lucas: That is actually where the shift is most dramatic. The classic example is Pearson's 'Mastering' platform for STEM courses. A few years ago, a student might have paid two hundred dollars for a new textbook plus another hundred for an access code for online homework. Now Pearson offers a digital subscription called Pearson+ that gives access to the e-textbook and the homework platform for about fifty dollars per course per semester. McGraw Hill and Cengage have similar offerings. So a course that used to cost three hundred dollars in materials can now cost fifty. Luna: That is a massive difference. But does the publisher still make money? Fifty dollars per student per course seems low compared to the old model. Lucas: They make less per student, but they capture far more students. The old model had a huge used-book market that the publishers saw zero revenue from — a student buys the book once, then sells it, and the next five students use it without paying the publisher a cent. The subscription model eliminates that. Every student pays every semester. So the publishers trade a high one-time price for recurring, near-universal revenue. And the student gets a lower upfront cost. It is actually a classic software as a service pivot. Luna: It feels like a win-win. But I have to ask — is there a catch? Digital subscriptions usually expire after the semester, so the student does not own anything. And if the publisher raises the subscription price later, the student has no alternative. Lucas: That is the risk. The long-term pricing power shifts to the publisher. But for now, competition from OER and from each other is keeping prices low. OpenStax, for example, offers free peer-reviewed textbooks for the most common introductory courses — biology, chemistry, physics, economics. They have over 60 percent adoption in some community college systems. That puts a ceiling on what the commercial publishers can charge. And the data from the Bureau of Labor Statistics shows that the textbook CPI has been declining for six consecutive years now. So the trend is durable, at least for now. Luna: Let me see if I can tie this back to the broader wage and price picture. The core CPI is still elevated — it was 336.1 in June, down only slightly from a year ago. But within that index, some categories are actually deflating. Textbooks. Used cars — we talked about that a few episodes ago. Some electronics. So the story is not just 'everything is expensive.' It is more granular. Lucas: Right. And the granular story matters because it tells us where market forces are actually working. In textbook publishing, the combination of digital disruption, open-source competition, and a shift in consumer behavior — students refusing to buy the expensive new book — has genuinely bent the price curve. That is not true in health care or housing, where the institutional structures are different. But it is worth understanding why it worked here, because the same playbook might apply elsewhere. Luna: What would need to happen for, say, health care to see a similar dynamic? Lucas: You would need an open-source equivalent — something like a free, high-quality alternative that disrupts the incumbents. In health care, that is much harder because of regulation, licensing, and the fact that the product is not a digital file you can copy. But in education, the product — information — is inherently digital. So the disruption was, in retrospect, inevitable. It just took longer than we expected. Luna: You know, I think about this when I look at the data on average hourly earnings. The fact that wages are finally outpacing inflation in many categories is a big deal. But the textbook example shows that even within a category that is getting cheaper, the wage growth multiplies the benefit. You are not just paying less in nominal terms — you are paying less with dollars that go further. That is a double win. Lucas: Exactly. And that double win is exactly what this show is about. If walking through the economy with us has made something click — whether it is the textbook story or the wage data or the inflation numbers — the reason we can do this ad-free, and go deep on one number instead of rushing through headlines, is listener support. If today was useful to you, you can keep that going at buy me a coffee dot com slash fexingo. It is a small way to make sure we keep doing episodes like this. Luna: Yeah, and it really does make a difference. We hear from listeners who say they use the data from this show in their own work or conversations. That is exactly the kind of thing we want to keep doing. Lucas: Alright. So back to the textbooks. The open question is whether the subscription model will eventually lead to higher prices once the publishers have locked in enough students. That is a real risk. But for now, the data is encouraging. And for the nineteen million students heading to college this fall, the textbook bill is one area where the trend is actually your friend. Luna: And that is a rare thing to be able to say in 2026. Lucas: It is. Let us hope it stays that way.