I've volunteered at a summer youth leadership camp held at a local state university since 1998. In the last 10 years the host university has undertaken massive construction of more "luxury appointed" dorms, recreational complexes, a huge basketball arena, and upscale dining halls. The justification was that it was necessary to do these things to compete with other colleges. I can't say that I've followed the cost of their tuition and fees, but given the amount of money spent on construction I can't imagine the curve is flat.
I won't dispute that students will pay. I think it is predatory, though, on the part of the colleges.
I'd argue students, by and large, don't have the maturity to make such consequential financial decisions (taking on loans representing multiple years of their future gross income that can't be discharged in bankruptcy). The average young person just hasn't had the duration of life experience to think on a 10+ year horizon. (Arguably a shortcoming of humanity in general.)
