Amazingly, when I tell anyone that I'm homeschooling our high school daughter, the second question I'm asked is "What about the prom?". The first is ALWAYS, "What about socialization?" I usually tell them she doesn't need either for a successful education. She doesn't need to be around an entire school full of people her own age to learn, and she has no desire to go to a dance just because it's expected.
Proms have gotten totally out of hand. It's expensive for the schools to rent halls because NO ONE wants to have proms in the school gym anymore, heaven forbid! The costs of tux rentals and prom dresses can get out of hand, and too mnay kids think they should have limos to drive them to and from the prom. I have friends whose kids are working after school jobs just to earn the money they need to pay for their part of the prom costs.
Many parents are now enlisting the help of businesses to host 'After prom lock- ins' so kids can stay out all night and have a good time without the problems of drinking and driving, or getting into trouble in other ways. What's funny is that some of our daughter's friends from the high school are not even bothering going to the Prom, they're just going to the after Prom party!
Of course, the 'cool' kids think the After Prom lock-in is dorky, and their parents are more than happy to foot the bill for their kids' hotel parties because they want their kids to be 'cool', and they, of course, want to be considered 'cool' by their kids' friends.
You hit the nail on the head--the problem is parents who want their kids to be cool.