You are correct to use median income, which was about $6500 in 1970, making $3000 = 46% of median income in that year [1]. You are also correct to say that taxes went up, by about 140% (according to Elizabeth Warren's data [3]).
In any case, this only makes the paradox I highlighted more puzzling. College is more expensive, and yet college attendance per capita is up 40% over 1970 [2]. If real income is flat, then people must be giving up other goods and services to attend college. And yet, people seem to be consuming more goods and services of all sorts in addition to college.
This doesn't make sense. I suspect that real income is being incorrectly calculated.
I know multiple trends that address your paradox, and I do not know the relative importance of them.
The first is that the savings rate has dropped significantly. People who do not save can purchase more goods with the same income. (At least in the short term.)
The second is that due to widening income disparities, the ratio in earnings between the median family and the top fifth has increased. Therefore college has not become as proportionately hard to afford for the top fifth as it has for the median.
The third is that the increasing income disparity has come with widespread recognition that a college education is a good way to improve your odds of being in the top fifth rather than the bottom half. This makes education proportionately more valuable. People are willing to spend more on things they value more.
Fourth, the structure of financial aid has changed. It is less often true that students pay the full sticker price for college today than historically. And the poorer you are, the more likely you are to get a break. (Harvard's policy being an extreme example.)
And last but not least, in a very different tangent, income disparity leads to an increased fraction of consumption being accounted for by a small fraction of the population. So changes in total consumption do not necessarily indicate changes in consumption for the median.
The particular paradox I'm describing is not limited to college - it applies to virtually all goods and services. So any college-specific explanation is incomplete.
It's also not limited to any strata of income - the poor today have more goods and services available than the middle class of 1970. This casts doubt on explanations based on inequality.
Decreased savings might explain things, though I think in the long term it would cause inflation. Would need to think about it.
In any case, this only makes the paradox I highlighted more puzzling. College is more expensive, and yet college attendance per capita is up 40% over 1970 [2]. If real income is flat, then people must be giving up other goods and services to attend college. And yet, people seem to be consuming more goods and services of all sorts in addition to college.
This doesn't make sense. I suspect that real income is being incorrectly calculated.
[1] See the table here, and do an inflaction calculations backwards to see that the average income was $6500 in 1970. http://en.wikipedia.org/wiki/Household_income_in_the_United_...
[2] Combine data from here http://nces.ed.gov/fastfacts/display.asp?id=98 with the fact that the population went up about 50% between 1970 and today.
[3] I'm citing Warren's data and ignoring her opinions. Some people seem to get confused when I do this, so I'll be really explicit about it.