That was because states covered most of the budget. Austerity policies changed that. And supply and demand is not applicable to macroeconomics, which education is part of.
1) The government pays the majority of it if you're poor, schools know you'll pay 2) If you're middle class your parents pay half of it, the government pays half of it, schools know they'll pay 3) If you're upper class, you might have a legacy admission and the school knows your parents will pay and probably donate to the school too
And very few people get government scholarships, most get loans which must be repayed: essentially an extra tax on the middle class.
And states only fund roughly half of school's out of their budgets and that number has decreased in recent years.
Untrue. Lots of people get Pell Grants, but the value of each is very small.