Professor  Richard points out that other industries have to innovate in order to cut out costs of expenses, but colleges have become lazy and soft when it comes to innovation because they don’t experience that same market pressure to control price. There are billions of dollars flowing in the education system every year from the federal government in form of loans, grants and tax benefits to students and their families. Many private schools have realized that they can take advantage of this so they keep increasing the price. They are possibly taking advantage of students because 60% of the federal aid goes to students in private colleges while they only occupy about 25% of the colleges in US. 

The biggest fraction of our tuition goes to salaries. The national average student to faculty ratio is 18 to 1 meaning for every 18 $ there is 1 faculty member. Similarly, an average professor at a private college makes well above $126000 per year. Meaning each student would be paying 7000 which doesn't seem that bad but there is more than just faculty. There are also coaches, kitchen staff, maintenance, admission staff, IT staff, security guards and much more. Altogether the salaries and benefits of these individual add up to a whopping $24000. 

In the last 20 years, college enrollment has increased by 50%. Federal and state funding for students has actually increased to an all-time high since 1980 but with the simultaneous increase in students, per-student funding has hit an all low. With less federal and state money, students have to pay more out of the pocket to make up the cost. 

85% of full-time degree-seeking students at a four-year university receive some sort of financial aid with the average grant hovering around $15,500. There is still a significant amount that you have to pay from your pocket but people who go to college earn an average 98% more than those who have a high school diploma. So the true cost of college over time is not $32000 a year or $128000 over four years but rather negative $500,000.