Market forces don't work when decisions makers are ideologically driven (as opposed to being driven by their own self-interest).
People who let their personal ideology drive their market decisions are either not self-interested (they are interested in their ideology more than themselves) or they are not informed (they think that their ideology will address market concerns and result in a good market outcome, when it will not). I think universities are led by these types of people. When people stop applying to a university because they are too leftist (e.g., Evergreen, the University of Missouri), they assume people are not applying because they are not leftist enough, and they double down on pro-leftist policies.