15 years ago, most of the budget at state schools came from the state and from the federal government, since 1999 this portion from the State and feds has been shrinking where many universities funding sources are less than 50% from their state, some are as low as 40%. The loss of revenue has to come from somewhere, so tuition is increased to cover part of it. Sounds like more free market to me and less government involvement to. No one makes people go to post secondary school and forces them to get a degree that doesn't pay well in the real world.
Over that time, post-sec administrative positions have multiplied at state schools. To the point that in some state university systems, administrators & bureaucritters outnumber instructors. And they are subsidizing worthless departments. Cut the multitude of useless mouths at the trough and see some real educational efficiency blossom.
Also, You assume less state funding, but are plying percentile games. For example, if the state maintains its level of funding, but the university raises tuition, the percentage of total funding from the state goes down. Without cutting a single dollar going from the taxpayers to the state university system. There is no "loss of revenue."
This happened here when the legislature lifted restrictions of tuition increases. "Oh the noze, the state is SLASHING post-secondary education funding!!!!111!!!" No, the state schools just drastically increased tuition and went on building and hiring splurges.