LazarX
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There's nothing like Photoshop.... period. It is a uniquely powerful piece of software, and none of the other options are equivalent.
That said, for most non-professional uses, alternatives, even free ones like the GIMP will serve.
Photoshop is an extremely expensive program for someone not doing professional work in the field.
Photoshop Elements is a much cheaper slim-downed consumer version.
zylphryx
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If you are a student, you can get Photoshop (and pretty much all of the Adobe lines) for about 80% off of list price. I picked up Creative Suite 2 Premium back in the day for about $300 (Photoshop, Illustrator, Flash, InDesign, Fireworks and Dreamweaver included in the suite, along with Bridge). The Student/Teacher version of the 5.5 Design Premium Suite (with the previously listed apps) is $449 while the Student/Teacher version of Photoshop Extended 5.5 is $199.
These are the fully functional apps, and you can later upgrade them to non-education versions (which gets you some extras, but no difference in functionality); the education version can also be used for commercial work (verified with two Adobe reps a couple years ago).
Upgrades, however are not cheap (at least if you do not upgrade to the next step up ... I just did the jump from CS2 to CS5.5 and it ran about $800), so be aware of that aspect if you go this route.
zylphryx
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For those who don't already know, companies try to get you hooked on their products while you are in school so when you go into the workplace you'll demand to use their products. So take advantage of the "discount" when in school - it's well worth it to the companies making the offer.
To be completely honest, it's the schools in conjunction with the software companies. Schools set up the standard of what applications they will be using for the classes they teach. This is typically based off of what is being used predominantly in the workplace that the programs are tied to. Being familiar with the apps that are used by most in your intended field is kinda important after all. ;) I would, however, be surprised if the issue of cost did not play some role in the determination.
But, if you are going to use the software for personal endeavors after school, you most likely will never need to upgrade. As such, it really is a great deal for a powerful suite of apps.
If, however, you are going to use it professionally after school or if you will be using the software for multiple classes, then you may as well get the initial purchase as cheaply as possible (especially if you want to be able to work on school stuff at home instead of jockey for a machine at a computer lab). There's a BIG difference between $449 and $1899 after all.