Most private universities provide significant aid to students; they actively engage in price discrimination.
Out of state tuition earns more than in-state, but there are additional fees that foreign students pay.
As for the money, it goes into a lot of the facilities and university operations. Universities are big clout chasers, so they will try to spend money to increase prestige.
Some people have bad experiences where they lost trust in people and therefore treat the lack of trust as experience. That if you aren't as paranoid as they are, you don't know as much as they do.
Also, some people are bad to work with or are mediocre at their jobs, especially at communication. This is how they cover for themselves. It isn't their fault that they messed up, you didn't tell them something that they should have realized they should have asked but it is easier just to blame you.