I'd also argue that a soft economy also drives up demand for the "elite" schools. Picking some random numbers there is a huge difference between the scenario of 80% of people with degree x getting a good job and 8% doing so. It is no longer about just having the piece of paper to get you in a door, the name on the top and (as aquinas highlighted) the network behind it become all that more important to even find the door.

JonLaw - I totally agree with the view of purchasing a "letters patent". I went to an local university and graduated having made money in the process. I had friends that went to the more expensive top school and graduated with the same degree hugely in debt. In the end (at that time) our degrees opened the exact same doors.