I looked into this a bit for the University of California system, and that did indeed seem to be the issue in that case. Tuition has gone up, but less than state funding has gone down. In other words, the university is getting cheaper to operate on a per-student basis, but nonetheless getting more expensive to attend, because of a large shift in who pays (from taxpayers to students). The historical public funding levels were around $25k-$30k per student, in present-day dollars, while today the state kicks in a bit under $13k per student: http://www.kmjn.org/misc/uc_funding.txt
It's not entirely due to the increase in student population, either, although that's part of it. If you look at just the total funding column, it's gone down since the '80s, despite the state's increasing population and GDP. Someone should double-check my numbers, but last time I looked into this I remember a back-of-the-envelope calculation that California used to put ~0.3% of state GDP into the UC system, and now puts in only about 0.1%.
You can look at british uni's for another data point, though. It all has to do with demand, not the cost base. Uni's were free, but seeing how much the 'stupid americans' were paying (thanks to leverage), the UK started to reduce grants to 'tap into the damand', and they now purposefully issue debt to students as a from of highly targeted TAX.
The demand comes from the 'social marker' heuristic that a university degree conveys (ie, social proof) for employment and personal networking. Until there is a competing "commodity" whith this aspect of social utility, a degree with have economic value proportional to GDP, in a way like housing stock. The main problem with broad based inflation of the costs of college is that there is only so much "beach front" real estate in the degree system. The top 10 schools are typically the ones that matter, for social signalling, and quite frankly nobody cares how much you paid to get the degree. A "free" degree from cambridge (UK) has a good value, just like a $$$ degree from MIT or Stanford. Heck, many will argue a <dropout> from a top 5 school has more going for them than a degree holder from a middle of the pack school.
The great thing about Berkeley is its one of the few state schools that has a powerful global reputation. And in that sense it remains good value for money (if you are a resident Californian). But the taxpayers and politicians seem to be playing a rather sophisticated game of stealth-taxation with the Higher Education system as a whole. It really doesn't matter the details until one unpacks how the system is really working. And what is driving supply and demand at a more 'meta' level.
Not to mention, barely anyone pays the "listed price" in the USA for any school.
but seeing how much the 'stupid americans' were paying
What an amusing and inaccurate stereotype. Brits who repeat it have apparently never been to the further reaches of England. For example, Birmingham or Liverpool... See how stereotyping isn't helpful?
Easy there...Its not in 'inverted commas' for nothing. After all, the point is that the Brits copied the US model because the 'thought they were onto something'. Also, It may help to note that the UK <had> previously a policy of charging US students 3x cost prior to the increase in fees. Which seemed like a deal only a crazy person would take.[1] But...The US/other foreign students were still paying 1/2 price vs what the US-based schools cost, hence they viewed the 3x cost as a bargain. So, the Brits might pay $5K, the US would pay $15K and the North American Uni's would charge $30K. Theat is, notwithsatnding, the US students were paying 10x in their home country for the same services. After the changes, the UK students may pay about $15-20K pa, closer to what they charged the non EU people before. And the others (non-locals) are paying double that, much closer native costs for them. And thus a no-arbitrage position.
[1] There is a long history of "fleecing" rich foreign kids at schools, where they are looked at as cash cows. This is both true in the US (where they pay 'retail' with no financial aid) and in places like the UK/EU where locals are heavily subsidized.
It's not entirely due to the increase in student population, either, although that's part of it. If you look at just the total funding column, it's gone down since the '80s, despite the state's increasing population and GDP. Someone should double-check my numbers, but last time I looked into this I remember a back-of-the-envelope calculation that California used to put ~0.3% of state GDP into the UC system, and now puts in only about 0.1%.