Many state colleges were created by land grants specifically so the college would have enough income from the land to operate without charging students for tuition. After WW2 the federal government started throwing money around in the form of research grants, and now throws money around in the form of student loans. Schools liked the easy money, but the lack of responsibility in managing the flood of money has wrecked the country's education system. Schools no longer work for students, and they require ever increasing amounts of cash just to maintain what they have already built.
Or at least state universities could give some sort of scholarship to those with the above qualifications, but so everyone that has those qualifications actually gets a scholarship.