I agree with you on this. Universities have been able to raise tuition at a rate greater than inflation because the demand is there. They have never had to really examine their cost structure and find ways to operate more efficiently, as a corporation might have to do. And in order to keep the demand as high as possible, they have improved facilities and perks to the extent that today’s college student often has access to food and lifestyle benefits that they won’t be able to afford after graduation (sushi in the dining hall, unlimited spin and yoga classes, climbing walls, etc).
Having said this, there is a difference between the cost structures at a research university and a small liberal arts college. It is much more expensive to offer science and engineering courses with the associated labs. The facilities themselves are much more expensive to build and maintain, and the additional staff to teach the labs is also more expensive. While Duke has invested a lot in upgrading housing, athletic facilities, dining, etc., they have also greatly improved research facilities in order to attract some of the top researchers and professors (take a virtual tour of the new
Wilkinson Engineering building and you will be impressed by the facilities that will help develop the scientific minds of tomorrow.)
The accounting systems at universities are creative, to say the least. In the engineering school, when researchers receive grants (which bring in money which theoretically will help pay for additional dedicated facilities and personnel that are added to the school’s budget), the school also receives an increase in its allocation of overhead expenses. This allocation can actually increase the budget deficit.