The point is that the parents who are paying for their kids to go to these schools have already put aside the money in a 529 or other account, and if their kids

The point is that the parents who are paying for their kids to go to these schools have already put aside the money in a 529 or other account, and if their kids get admitted, there is no question of cost to put their kids a step ahead. Given this, exclusive universities know that they can charge prices that are relatively extreme, as they don't have any financial, moral or legal obligation to not do so. The question of cost compared to earnings that you raised is immaterial for these students, as the students will bear none of the cost.