At least in the US, skyrocketing college costs aren't really due to excess demand. They are a side effect of the torrent of student loan money that the schools have captured over the last 20-30 years.

The lenders and the schools worked hand-in-hand to ratchet up the price tags and the size of the loans for college educations. All their incentives were to go up up up! The additional revenue to the schools didn't go to a better education, of course ... it largely went to administrative salaries. The administrative budget at US colleges has grown unbelievably while the instructional budget per-capita has been flat, driven down by the "adjunctification" of teaching staff.