As siblings note, the "historically" I'm talking about is pre-WW2.

Life in the US from 1950-2000 will one day be seen as a historical blip, not a state of being the US can ever return to. In that period, the US reaped massive profits from its position as sole industrial powerhouse for the first 20-30 years of that period (thanks to the destruction of the rest of the world's industrial capacity in WW2), and then as the world's bank for the following 20-30 years. It was a privileged position that--combined with the rise of the automobile and the opening up of cheap hinterlands for suburban development, without accounting for the externalities of course--enabled all sorts of leverage and quality of life for the working and middle classes, including massive subsidies for higher education.

Those days are over. Labor has little leverage these days, there's little exploitable land, and the middle class is more or less gone.

We could definitely decide to bring back the massive subsidies for higher ed -- after all, they're present in much of the EU. But it's not clear why one would think that heavily subsidized education would have an appreciably better effect here than it does in the EU.

"Prior" was before 1920 or 1945 or so. Costs for higher education placed it well into the realm of the super-elite.

Higher education was only made affordable after WW2 in the western world, and has been rising ever since then (at least in the USA). Before WW2, it was something mostly rich kids did.

Whenever this comes up, I'm always puzzled about where the extra money is going. Is it just pure profit for the University?

Rarely profit. But it goes towards higher salaries, larger administrations, financial aid, and various amenities that today's college-bound kids' parents demand, like comfortable dorms, gyms, etc. College in the 80s didn't look much like college today.

For many schools, the actual cost the average student pays has not changed as much as the sticker price. One reason is that some colleges discovered they could price discriminate: by charging $XXk/yr as the sticker price, they could let in some fraction of students who can afford to pay full fare, and use that money to offer financial aid to the students they want to attract but who can't pay full fare. Another reason is that basically no college competes on being less expensive, because that might imply that they're not "worth it".