Same thing as all other consumerism issues. Private colleges are the biggest viral marketing success on the continent (world?).
Everyone's always talking about harvard, MIT, cal tech, CMU, Cornell, etc etc etc.
A bunch of students come out of there amazingly successfully, and everyone forgets the countless students who fail horribly, or end up not better off than the average joes. Then word gets around... We've all seen the bunch of friends who get together after highschool and ask "So, where did you go?!", and when someone answers a college name they didn't hear of (which should be common: no one knows even a fraction of colleges' names by heart), they're surprised. "Oh? Where's that, never heard of it". No one wants to be the person who went to a college no one heard of.
And thus, people go and pay up the wazoo for suboptimal scenarios. Sure, if you're good enough to get top grades at MIT, you're almost guaranteed to succeed in the job market... But please don't go in liberal art at Harvard when you're just barely qualifying and plan on partying all day/all night unless you have one hell of a backup plan.