Why Does College Cost So Much?

Part of the reason: Bloated administrations in part due to an increase in student loans.  Another part of the problem is ideology: colleges are often less about rigorous study and more about ideological indoctrination which costs money to implement.  See Subprime College Educations and Will College Bubble Burst From Subsidies and Problematic Boom in Higher Ed Administrators. [excerpts below].

To fix things I would start by eliminating the virtually useless government propped up accreditation agencies as I've discussed here and here.

As philosopher Robert Koons says in his excellent article on education: 

 Eliminate or ignore accreditation. The regional accrediting
bodies are little more than higher-education cartels, ensuring
that students can go to any college they like so long as they are
all the same. They discourage competition and are sustained
by the power of the federal government, which denies all
federal aid to students in non-accredited institutions. We
should replace “official” accreditation with private companies
that provide impartial, third-party assessments,

Excerpts:

For what have institutions of higher learning done with their vast increases in revenues? The answer in all too many cases is administrative bloat.

Take the California State University system, the second tier in that state's public higher education. Between 1975 and 2008, the number of faculty rose by 3 percent, to 12,019 positions. During those same years, the number of administrators rose 221 percent, to 12,183. That's right: There are more administrators than teachers at Cal State now.

In all, from 1987 until 2011-12—the most recent academic year for which comparable figures are available—universities and colleges collectively added 517,636 administrators and professional employees, or an average of 87 every working day, according to the analysis of federal figures, by the New England Center for Investigative Reporting in collaboration with the nonprofit, nonpartisan social-science research group the American Institutes for Research.

[I]n 2009 the base salary of UC Berkeley’s Vice Chancellor for Equity and Inclusion was $194,000, almost four times that of starting assistant professors. And by 2006, academic administrators outnumbered faculty.
UC Davis has a Diversity Trainers Institute under an Administrator of Diversity Education, who presumably coordinates with the Cross-Cultural Center. It also has: a Lesbian, Gay, Bisexual, Transgender Resource Center; a Sexual Harassment Education Program; a Diversity Program Coordinator; an Early Resolution Discrimination Coordinator; a Diversity Education Series that awards Understanding Diversity Certificates in “Unpacking Oppression”; and Cross-Cultural Competency Certificates in “Understanding Diversity and Social Justice.” California’s budget crisis has not prevented UC San Francisco from creating a new Vice Chancellor for Diversity and Outreach to supplement UCSF’s Office of Affirmative Action, Equal Opportunity and Diversity, and the Diversity Learning Center (which teaches how to become “a Diversity Change Agent”), and the Center for LGBT Health and Equity, and the Office of Sexual Harassment Prevention & Resolution, and the Chancellor’s Advisory Committees on Diversity, and on Gay, Lesbian, Bisexual and Transgender Issues, and on the Status of Women.