End federal subsidies and loans. For every dollar a school accepts of federal funds they are required to maintain a certain percentage of private funding. Since a very big portion of this funding ends up coming from federal sources, the end result is they are constantly required to jack up tuition prices to meet the minimal private funding level. Once this is changed so many other issues will begin solving themselves.
Too many people who don't belong in college are burning vast resources to get degrees in underwater lesbian basket weaving and then doing nothing with the degree and ending up in massive debt. The current educational system is one big lesson in inflation.
I don't live in the US but I read some article blaming the subsidies for the continuing rise of tuition fees. Universities know that one way or another, they are going to get paid and so they jack up the prices. Without such a guarantee, they'd price it realistically.
I also agree with your opinion that not all people belong in college. College diploma used to mean something when not everyone can have it. Now it became just another requirement for a job and is also negatively affecting people who can't go to college (either for intellectual or economic reasons). If you're a highschool graduate applying to work as a barista, they'd pick those English majors over you!

As for vanity courses, IMHO they should not be subsidized and loans not given out for them.