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So cut funding, and increase loans. This is NOT the formula for decreasing the cost of higher ed.

We now have something absurd like 70% of high school kids attending college. Of that, the percentage requiring remedial education for basic math and English skills is approaching 40%. There is no need for that many degrees out there, and many of the attendees clearly aren't prepared. But because of loans, they get to buy their way in. This requires more residence halls, more lecture halls, more departments offering more useless degrees to keep them busy. The increased physical facilities require more waste disposal contracts, more utilities, and more facilities management. The useless departments all carry the weight of expensive professorships (thanks AAUP), and most don't do any research that generates revenue. Because of this, they are mostly funded by internal grants (i.e. school money funded by federal aid, tuition, etc.). Then there's that remedial part, which adds a 5th year, and a whole overhead of very expensive management and professors to make it happen. Of course there is ZERO chance that you can get dollars from anywhere but tuition or federal and state money to fund that extra year of bloat due to our awesome high school system. (Yes, we don't need 70% of HS students getting a higher-ed degree, but even vocational schools are having issues with the need for remedial education and it drives up their costs as well).

Where I work, our oldest residence hall is just about 100 years old. We have put up 3 new high rise residence halls in the last three years, and we STILL have been renting whole floors of nearby hotels to deal with housing shortages even though the majority of our student body commutes. They also don't build them like they used to. We are having to decommission 30-40 year old residence halls due to the general decrease in construction quality. At least in this region, physical facilities are where most federal higher-ed dollars have been spent. Switching to more loans, and less grant money means we will have no place to put students.

Like a lot of universities, we finally bit the bullet, and we have been merging departments, eliminating departments, eliminating staff, shutting down buildings and leaving them to rot, and plan on cutting down admissions by about 20%. When we finally complete the current construction, I doubt you will see any new construction for about 15 years. If you do it will probably be to knock down a disused building to provide for parking.

That's WITH the federal aid.