The usual culprit mentioned is demographics -- the number of high school graduates each year is at an all time high due to the baby boom echo. However, as pointed out in the article quoted below, the number of slots at top colleges and universities has grown just as fast as the population of graduates -- there are no fewer slots per high school senior than in the past!
The real cause is the growing cachet of elite education. Students who in the past might have only applied to their local state university are now applying to multiple schools across the country. The pool of applicants to top institutions is deeper than before, but it's a sociological trend, not a demographic one.
Washington Post: ...Driven by the baby-boom echo, the number of high school graduates jumped from 2.9 million in 2002 to 3.1 million in 2006, an increase of 8.4 percent.
"But the number of spaces in elite colleges is increasing too, at a nearly identical rate. According to U.S. Department of Education statistics, the 60-odd colleges and universities rated 'Most Competitive" by Barron's Guide to Colleges sent out 199,821 acceptance letters in 2002. In 2006, the number of 'fat envelopes' had increased to 215,738, an 8.0 percent jump. As the nation has grown, its elite colleges have grown along with it.