Strange as it seems, one of the biggest reasons why college tuition is increasing at a rate of more than twice the rate of overall inflation is because of the well-meaning student loan program passed by Congress in 1992. Suddenly all students, not just poor ones, could obtain government guaranteed student loans. Colleges and universities treated that as free money -- they raised tuition to soak up all the extra cash that was thus converted to student debt.
This was consistent with the voodoo economics that was instituted in 1980 for both the federal government and individuals. Live beyond your means now, hope that you are dead when the bill is presented to your grandchildren.
The other factor is the fiscal pinch that state governments are in. They have no extra money to fund their state university systems (basically for the same reason -- they already spent all their money years in advance of earning it.) This is why tuition at state universities is actually rising faster even than at the most expensive private colleges.
Where does the money go? Well, I am a University professor. I got an annual raise of $214 dollars last year. The university paid for it by removing the telephones from all faculty offices and discontinuing putting chalk out in the classroom chalk trays. Use your cell phone, buy your own chalk.

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