we just used to subsidize it more. When we were kids the government paid 70% of tuition, most of it was money given directly to the colleges who passed that money on to you and me via lower cost tuition.
In the early 2000s Bush Jr and the Republican party slashed those subsidies, which is why the cost shot up. It's got nothing to do with administrative costs or fancy dorms (the dorms literally are paid for by rent paid by students, I know, I put my kid in one of the prison style dorms in college because the nice ones were too pricey).
As usual we're all being lied to.