Those schools are businesses – they’re trying to make money. Most physical colleges are non-profit; they’re just trying to break even at the end of the year after paying their bills, they aren’t trying to make more money than that. That’s why distance and online schools often charge so much – they have many of the same expenses as ‘real’ schools but want to make more money than they do.

Because they can. As Eri said, online schools (UoP Axia, Everest, all the others that have TV and internet advertisements) are for-profit corporations, whereas campus-based schools are generally non-profit.

The key difference is their focus. A non-profit school is truly an educational instuttion; the money they make goes right back into the school to support better programs, hire good faculty, maintain resources, etc. At a for-profit school, the money they make goes into the pockets of corporate execs and investors while only a minimum is spent on the quality of their education.

Going back to “because they can”:
Online schools target a demographic that has been excluded from post-secondary education in the past. Young parents, low-income families, and anyone else that can’t afford to stop working for several years to go to school. They know those people are desperate, and will pay a high price for the chance to get a better career. And they’re pretty good at tricking people into thinking their programs don’t suck.