Combination of different factors at play on this one...some are social/societal, others are purely economic and out of some folks control.
To start with the more simple one (the purely economic reasons). The overall mentality on "is college required" has changed, and the job market has altered itself to fit that idea. Meaning, the days of being able to get a decent paying job out of high school, that, within a few years could get you a house, and a car or two in the driveway, with no college degree are largely gone.
Those types of manual labor/warehouse/machinist jobs aren't around in the same capacity they were, and the ones that are still left, aren't paying like they were a few decades back (in comparison with inflation adjusted dollars).
So, if you're an 18 year old, who's parents can't afford to send you, and you're not in a position to be taking on $60k worth of student loan debt, the odds are slim that you'll find a job that will put in you in a position of enough upward mobility that you'd be able to buy a house, rent a nicer apartment, etc... by the time you're 22. For most people, "stay with mom & dad" is more appealing than "living a junky little 1-bedroom apartment in a bad neighborhood" --and I can't say I fully blame them.
On to the social societal aspects.
There are places in the country where upwards of 40% of college graduates with a 4-year degree are living with their parents 4 years after graduating. That means that there wasn't an economic barrier to getting into college for them.
"What people are going to college for" has a hand in that outcome.
If you look at the data trends, you'll see a few major shifts.
Bachelor's degrees conferred by postsecondary institutions, by field of study: Selected years, 1970-71 through 2017-18
People majoring in communications, humanities, and visual and performing arts have way outpaced other fields.
Between 1995 and 2005, the number of conferred bachelors degrees:
Visual and performing arts: increased by 70%
Communications: increased by 55%
Humanities: increased by 34%
...and this is during a time window where the total number of conferred 4-year degrees only rose by 22%
For Visual/performing arts and communications especially, the markets simply aren't there to have a good job placement rate with that sort of degree. There's been a mentality shift from "let me find something that I can tolerate or like a little bit, that has good pay opportunities, and study that" to "I deserve to be able to pursue my ultimate passion in life, and earn a good wage doing it, and if I can't, that means the system is unfair and we need to make college free".
It would take quite a bit of mental gymnastics and lack of pragmatism for a person to come to the conclusion that majoring in music theory or journalism is going to land them a stable $60k+ job out of college given the very limited job market for those things.
In terms of the perception of a "shrinking middle class", that one is half-true.
Even though when controlling for inflation and lifestyle, there is still evidence that "the middle class is shrinking" to a small extent, the issue isn't nearly as pervasive as some think it is.
This is largely because people are comparing apples and oranges.
They're looking at it as "The number of people considered middle class in the 1950's was a greater share of the population than the number of people considered middle class in 2020", without accounting for the fact that those two time-period specific classifications are wildly different.
A lifestyle that was widely considered "middle class" back then would be considered "lower-middle" or even "lower" class today.
If you were to ask the question "how many people, in 2020, can life a "middle class lifestyle", the way it was defined back in 1955?", it would become apparent that the gap isn't as big as people have been led to believe.
Middle class back then was a 1100sq ft home with 3 bedrooms, one bathroom, one TV, one car, most meals eaten at home, no cable TV, one modest vacation each year, one landline phone for everyone to share, etc...
Now "middle class" is perceived as 2000 sq ft home with 3-4 bedrooms, 2 cars, 2 bathrooms, cable/internet, 3 TVs in the house, most household members having a smart phone, eating out 2-3 nights a week, family vacations that cost north of $5,000, yearly Christmas shopping exceeding $1,000.
