If college were priced purely as a positional good, tuitions at lower-tier schools would be be sharply lower than those of upper-tier schools. In Illinois, SIU and NIU cost approximately as much as UIUC, the state flagship.

>If college were priced purely as a positional good, tuitions at lower-tier schools would be be sharply lower than those of upper-tier schools.

Price (to the buyer) is more than just tuition -- the more prestigious ones are more selective, which is effectively a higher price. It has to charge that higher "price" (selectivity) in order to maintain its prestige. And generally the correlation holds, between prestige and price, even if it's not perfect.

If there really is no difference between those colleges you listed, except that one degree is worth more but costs the same, then I agree I can't explain that.