I think if we compare the digital vs. analogue storage of information, multiple lecture halls vs. online/cloud-based lecture access, multiple small group space vs. third-party conferencing software the costs for the university would decrease significantly. There would not be a need for a computer lab, as the students already own computers or tablets with which they can access university digital resources. For scholarship students the university need only lease older tablets for the students to use.

University system was initially established by the Crown to provide a consistent supply of literati to the candidate pool for the budding bureaucracy. The university system was not intended to educate every subject in a kingdom. Somehow, the university system became the modern-day distortion of a daycare center for young adults. I think we differ in the opinion regarding the function of a university: I perceive it as an appendage to the state bureaucracy, you seem to perceive it as a general public good.

I think the current university system have become more of a mercantile industry (a service sector, as you put it) rather than semi-autonomous government bureaucracy. I have a very dim view of merchants, and their profit-driven purpose perpetuate dissemination of useless degrees at exorbitant price.

Like you, I perceive the solution to be government intervention. Returning the university system to its original purpose may provide a solution, but that would not be in accord to your desire for a universally educated citizenry.