So where has the money gone?

Baumol's Cost Disease: http://www.amazon.com/Why-Does-College-Cost-Much/dp/01902141...

Part of the reason prices have gone up so much is that credit has become so easy.

"Part of the reason," yes, but take a look at Why Does College Cost so Much? by Archibald and Feldman (http://www.amazon.com/Why-Does-College-Cost-Much/dp/01997445...). Their short answer is "Baumol's cost disease. The long answer is the book.

I'm a grad student in English at the University of Arizona, and one thing I've observed is that many if not most of my students probably could learn much of what they learn in my class if they were extremely motivated. But most of us aren't, and class provides a pre-binding incentive structure to actually do something, where the default would probably be to do nothing, or hang out on FB or HN, which is close to nothing.

I've written about this issue in more detail here: http://jseliger.wordpress.com/2011/09/04/from-the-department... and elsewhere.

People have said that college in its conventional structure will remain essential right up to the point where middle-class families can't afford it any longer, and I have a feeling we're reaching that point. If you'd like to know more about why, check out Why Does College Cost So Much? Tl;dnr: Baumol's Cost Disease combined with student loans (http://www.amazon.com/Why-Does-College-Cost-Much/dp/01997445...).