Yes, Elements and Photodeluxe, both low cost options, have existed for years and Adobe still made Photoshop available for a very low (under $100) academic price.
When FCP3 debuted, it's education price was $299. Now the upgrade to 4 is more than academic customers paid for FCP3! Kind of absurd, don't you think?
But yes, I believe this is due in part to FCE being positioned as their low cost entry in to the field. However, FCP4 now has several modules (Titler and Soundtrack) that aren't available (at least not yet) in FCE...