alt Hacker NewsI blame the "contest" started by the magazine US News and World Report, which started their college rating. This led to university execs aiming to raise their rating at the expense of education. Higher rankings meant higher bonuses for top employees - especially the president of the university. This race for ratings is why the cost of a university education has skyrocketed far faster than inflation.
I am not aware of any college that uses reports like US News and World Report rankings in the compensation packages of their executives.
I agree with your main point, but see a different cause, though. The problem is that parents and students use these reports as a bellwether for identifying prospective schools. Campus visits (short visits) where you see what the campus looks like, but don't actually learn what its about is the second problem.
There is too much PR and not enough focus on substance in higher education, just like there is in many, many, many areas of life in the United States today.