With regard to point "2", My own impression is just the opposite. I thought the problem was that we had handed tuition funding over to the private sector, with perhaps a government backstop, for banks anyway, creating a low risk, high, risk-adjusted ROR opportunity for banks. The profits were so attractive that apparently private student lending firms also got into the business and got a law passed so that these debts could not be discharged in bankruptcy. (Am I correct here?) Now it seems the government has reversed course and gotten these for profit lenders out of the business of higher education. That is the way it should have been in the first place, it seems to me. By the way it think the average student debt upon graduation is around 20K$. But if that is a number obtained by dividing by all students then it is very misleading. I think, however, it is a number obtained by dividing the total college debt by the number of students with college debt. In which case the average debt isn't "crushing" as I have seen it described. I wonder what the median debt is and how the debt is distributed. I also wonder how the for profit, often high priced, institutions affect these numbers. The other thing I would add is that I did a detailed study of tuition costs some years back and posted it on ET. (I also turned these calculations over to a local Public State University) What I found is that whether tuition costs were "skyrocketing" depended entirely on what inflation rate you compounded them at. If you used the official government CPI you got "skyrocketing", i.e., they were going up considerably faster than inflation. If you used the inflation rate that the independent site shadowstats.com used (~5%) you got that overall tuition had simply tracked inflation. Then, if you took into account that for public institutions, State subsidies had held constant or had even been reduced in some instances, you could understand why so many public higher ed institutions were struggling financially, right along with middle class America whose wages were declining in real terms but whose kids were faced with ever increasing tuition..
Beginning in the 1980s, As real wages among the lower half of the middle class first stagnated and then slowly declined the difference between the inflating cost of living and declining real wages was made up with credit. In this way the middle class was able to forestall a decline in living standards. There was some deflation in the technology sector which helped to a minor extent, but for the most part this deflation only appeared on paper after hedonics came into vogue.
Yes, this is true...lots and lots of credit AND targeted asset bubbles...In the contentious other thread, I made this exact point...that asset bubbles became an additional policy concern around the mid-1990's...it was also around the time that everybody in America became familiar with the Fed chairman/woman...