I am a retired university Dean. Here is one of the main reasons the cost of higher education has soared way beyond the increase in cost of living.
Student scholarships are based on a formula. The government pays a certain percentage and the college and students pay the rest. Colleges, even though they may be “not-for-profit” MUST in fact make a profit. If they do not, they cease to exist. They must pay their costs and they must reinvest. Part of the reinvestment goes to scholarships.
To maximize profit, colleges increase the asking price for tuition way beyond reason. That way the formula works best for them — they maximize the amount of money they get from the government. When the smoke clears, very few students pay the full tuition, and the college ends up with a lot more money. Everyone (mostly) wins, except the taxpayers.
Also, students in the USA (unlike in other countries) have come to expect MUCH more from college than just education. They want an active social life, a luxurious (or at least very comfortable) room in the domitory, high quality food in the cafeteria, lots of fun sports, fraternities and sororities—FUN, FUN, FUN. They also want a beautiful campus with lots of lovely buildings and state of the art equipment, etc. All of this is expensive.
Can we significantly lower the cost of higher education? Absolutely. Eliminate all the frills and provide high quality teaching—ONLY. Nothing else. Do some or all teaching online (teaching online has become very sophisticated and very effective). This eliminates the need for huge costly campuses that require massive maintenance. A single building where administration resides, some classrooms are available, and testing is done should be enough. And eliminate the formula for government subsidies for tuition. Give students a fixed sum instead of a percentage to help with tuition.