The correlary to that is that the "yield" goes down for all but the very most competitive colleges, so colleges have to build longer waitlists to ensure a full class. And more uncertainty for everybody.
You stopped short: why did they get more competitive? Because demand is outstripping the supply of desirable schools. Second tier schools need to improve their offering, and burnish their prestige, which takes time.
I don't think there's a satisfactory monolithic reason for this.
Maybe it's questions all the way down until, why do the common people need to get good jobs/hobnob with the upper classes? Because central banking policy of inflation?