Cost Of Tuition as proposed by department of education
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The other replies answer why, but not how. And the answer is student loans themselves.
College used to be something you had to work for, even if the relative cost was lower. If you didn't have the money or didn't want to spend it, you didn't go. But today, everyone gets free money to waste on whatever degree they want. So in addition to an increase demand, you now have a situation where the average student can "afford" a lot more than they previously could. No one should be surprised that schools responded to this by raising the cost of tuition.