Money is a big part of it. I attended paraochial school in the ‘70s and I can remember friends suddenly transfering to public school a year or two shy of graduating. This was when Catholic schools charged by the family and not the student. My missing friends transfered when they were the only kid in their families in the school. There were Carter’s misery index years so these parents maybe forgiven.
The reason costs went up is that Catholic schools were formerly staffed by members of religious orders, ranging from the big women’s teaching orders, such as the Sisters of St Joseph, at lower grade levels and some higher ones, to the Christian Brothers, the Dominicans or the Jesuits at upper grade levels (for boys, at least). When the religious orders collapsed, the schools had to hire lay teachers. Granted, they could never afford to pay them very well, but this still raised the price of the school.
The other thing it did, I think, was let in some less than brilliant teachers who were willing to take lower pay for being in a less challenging or threatening environment, since Catholic school kids were generally moderately well behaved and most of them had supportive families, unlike many public school kids.
I think this contributed to the declining quality of religious education, particularly, since it was now being taught by lay teachers who weren’t especially interested in it or prepared for teaching it. In addition, many Catholic schools hired non-Catholic faculty, all the way up to the principal, and only recently have various bishops begun to require that at least the religion teachers in their diocesan schools be Catholic.
Of course, the miserable quality of Vatican II era textbooks and catechisms didn’t help, either, nor did the dropping of religious practice, in part to accommodate the many non-Catholic students who wanted to attend Catholic school mostly because it was safer.
Parents aren’t willing to pay for an indifferent education with very little to distinguish it from the one they get for free. I think if the Catholic schools really went back to being Catholic and provided solid intellectual formation, hopefully under the direction of a good, revived religious order (look at the Nashville Dominican schools!), parents would be much more willing to make the sacrifice if at all possible, and there’d also be more scholarship funds.