Economists Robert Archibald and David Feldman address this problem in their new book Why Does College Cost So Much? Higher education, they argue, is a people-intensive, artisanal service, requiring a highly educated, well-paid workforce. And like other services that rely on highly skilled providers, such as legal assistance or medical care, its costs will rise faster than inflation. Unlike many consumer products, higher education does not benefit significantly from a reduction in the cost of materials. This does not mean that costs cannot be controlled: Larger classes–say, a minimum of 100 students–would certainly increase faculty productivity, but the quality of instruction would be adversely affected. Improving cost per student without harming quality is a far more elusive goal.
Archibald and Feldman suggest replacing the Pell Grant and other programs and offering federal savings accounts for all families. Source, Stanford Magazine.