Second, funding has been cut for public universities significantly. A lot of public universities charge tuition that is far more than it was 50-60 years ago. Ironically the expensive private schools are where you want to go for low cost college. They can afford to give full rides to a large portion of their population. Hence the competition.
People have gotten better at playing the game. It's like how chess ELO keeps going up. If you did SAT prep, was a nationally ranked fencer/golfer/tennis player, did volunteer work, founded a tech club and had a 95 average in the 80's, you'd have your pick of colleges. Much in the same way your average GM would kill if they were playing back in the 80's. These days you'd still do okay but you'd be competing against a larger pool of people who also did all of these things.
And because of the culture of university endowments/donations, US elite universities massively chase the 0.1% unlike in other parts of the world.
The less athletic smarter ones get sent the work.
The “trades” argument has always felt rather disingenuous to me. Sure you can maybe make money in many trades in a state with a strong union culture or if you own your own business (at which point I argue that the “business” aspect is bigger than the “trade”) one, but in most places I’ve lived, you’re making low 5 figures, maybe upper 5 figures if you have decades of work experience.
In addition, college is much, much more expensive as a whole, thus saddling these kids with debt that they foolishly take on because everyone kind of tells them they should go in debt for the prestige and opportunity. Last I read, the average student leaves school with $30,000 in student loans.
The key thing is there's nothing for these grads to do except compete with one another for a share of increasingly limited spots.
It's new in the sense that it's really the first time that Americans will have to acknowledge that one of the tool that was supposed to be the champion of social mobility (education) is no longer working well. And, that America will probably resemble the very thing it loathed: a sort of immobile society where your prospects will be increasingly determined by your parents position in society. Basically a lot like Britain, except with the veneer of American Exceptionalism.
EDIT: Cheers for the answers. I am going to do some research on tuition increases at state universities, as well as the historical numbers on student borrowing. Any pointers to where I can find such data already compiled would be appreciated.