However it's also important to recognize that not all of the runaway growth of University bureaucracy is due to poor management or redundant workers; expansion of IT infrastructure and increased regulatory requirements - especially for public institutions - demand more labor. These are the obvious culprits, but beyond these, because the modern University has become far more than just a place of higher education and has come to resemble a miniature city, it is expected to serve the diverse non-academic needs of tens of thousands of students, in addition to more traditional academic needs. Counseling and advisory services, recreational activities, food service, engagement and diversity programs, ubiquitous computing, etc. all add to the University's bottom line. Universities fear that if they were to stamp their feet and refuse to supply these amenities in the name of keeping down tuition, matriculation rates would decline as students would seek greener pastures elsewhere.
Add to this the fact that Universities receive no penalty from the market for continually increasing their prices. Because student loans are available to service ever increasing tuition costs, and students pretty much need to go to college to succeed in the 21st century, demand for college education is highly inelastic. What economic entity wouldn't raise its prices if it knew demand for its product wouldn't suffer?
In a traditional market, as one supplier increases price, competitors enter the market offering lower prices. This doesn't happen in the market for higher education because the value of a University is largely tied to its prestige, and prestige cannot be easily generated by competitors. We bemoan the high cost of University education then mock the University of Phoenix and similar offerings. Market dynamics are the guilty party here.