I've thought that what we need are more bare bones, teaching only colleges. These will be full four year colleges, but without sports, restaurants, research, nice afternoons lazing around the quad, etc. They will have all the romance of an office park. If you want somewhere to life weights then join the local YMCA. If you want to eat then go to the Pizza Hut down the road (or they could even rent space at the college). If you want to discuss how wonderful Obama is and how he will change the world you can find the local DNC or Starbucks in the phone book. If you want a good, solid education matching an average to above average (not really trying to compete with the Ivy League or MIT) then this will be the place.
The professors will be hired to teach and that will be their primary or even sole job, not an afterthought to be squeezed into their research time. These could even be set up as a chain with a common curriculum. Each professor doesn't need to review text books and decide the lecture topics.
However, I have a feeling that the universities running the accreditation boards would never allow such a college to get the accreditation it needs.
A related reason is that the nominal tuition at many colleges is a lot more than the actual cost to educate a student. Colleges shift the excess money paid by students from families that are too well off to obtain financial aid, in order to fund scholarships and grants for other students.
The high nominal tuition also causes students to take out much higher loans which greatly increase the funds available to the college. The colleges then expand and pay higher salaries, becoming dependent on the government loan money.
The whole thing is highly parallel to what is going on with health care prices.
Another factor increasing college costs is an economic law that says that any activity which is not becoming more efficient over time will increase in cost.