Baumol's cost disease concerns jobs whose labour productivity does not increase. It's obvious that teaching has increased in productivity. So where is the money going? Administration and capital expenditure.

Universities compete for the top students. They spend huge amounts of money on elaborate buildings and fancy landscaping. They hire more and more staff to run these facilities and cater to students' every little need. The pool of top students is limited, making this a zero-sum game. This is why tuition keeps going up.