This article ("The Dangers of Creeping College Privatization") from the Bacon's Rebellion blog describes the incremental privatization of state universities in Virginia. In a nutshell, Virginia has been gradually de-funding its top state universities in exchange for the schools having more autonomy to raise tuition and restructure programs. My favorite part of this article is the section where it describes the stealth aspect of incremental privatization:
To be sure, state education bureaucrats and legislators call it not “privatizing” but “restructuring.” This euphemism means the schools will gradually demand tuition closer to what is charged at the top national, private institutions but won’t have to go through the hassle that true privatization would entail — such as the selling of public property and making good on repaying decades of public investment.
The Privatization Blog has covered this issue as a nationwide trend previously here and here. As stated previously, the eventual result of privatized higher education is that religious/sectarian schools come to dominate the field. The secular private colleges of today were nearly all started as sectarian schools to train ministers; many went secular partly to compete with the state-run universities. Among new colleges that start today, the trend is the same - the vast majority are religious-sectarian. Education is not a very profitable business, and requires heavy subsidization; for-profit universities are simply exploiting the taxpayer-funded student loans, and will collapse if the government stops the flow of free tuition money. The private sector rarely starts or maintains good colleges except when a sectarian group channels money into it. In the end, higher education is funded mostly by taxpayer dollars or by church tithes.