This article, in the Washington Monthly's outstanding College Guide, tells the story of George Washington University's rise from an affordable private university in a dreary DC neighborhood to one of the most expensive universities in the United States.
GW's story is one that gets played out in smaller degree on campuses across the US. In order to attract more students, colleges and universities build new buildings, form new teams, hire more faculty, and mimic the goals and cultures of the richest, most prestigious campuses in the US. The result is, on the one hand, rising prestige, and on the other, rising costs.
There are all sorts of reasons to wonder about the wisdom of a prestige-focused path to institutional success. Most of them are obvious--there isn't a bottomless pool of families able to afford such schooling, and moves towards prestige don't necessarily lead to better learning are two of the most compelling.
But a third is equally important--in nearly every instance, colleges and universities on the prestige track give up focus and mission for prominence. (The story about GW is full of such losses of focus.) This need not be the case, of course. A campus could seek prominence by offloading all programs that are unlikely to attract attention, or by getting rid of all departments that are unlikely to become nationally prominent.
That schools do not seek prominence through focus teaches us a couple of things about American higher education. First, the pursuit of prestige is really a form of hedging bets, of trying out lots of things in the hope that some will be successful. Second, while apologists for higher ed in the US like to point out the "diversity" of institution types, there is really only one that matters for prestige--the research university. You can have big ones or small ones, but if you want a prestigious campus you need new buildings, a wide range of programs, faculty who publish a lot, and outcomes that are as much about prominence in and connection to the world of wealth as they are about learning.
That world of wealth and prominence is in key ways a zero-sum game--only so many people get to play. And so the prestige path is likely to be a winner for a few campuses and a loser for lots more. But without alternative models of success in higher ed, colleges and university leaders anxious to improve the lot of their schools will struggle to propose something other than the things that George Washington University has done so well.