While FSU did have a record 63k applications, the small 1.7% increase in applications (see https://admissions.fsu.edu/publications/profile/FSU-Class-of-2025.pdf ) pales in comparison to recent previous years, in which they’ve consistently had far larger increases. Not going test optional no doubt contributes.
I agree that colleges have little incentive to decrease applications. Instead colleges almost universally would prefer to increase applications. Assuming the applications are similar quality/yield to typical, then increased applications allows the college to be more selective and choose a student body who better targets the university’s goals. Even if the applying students are not academically competitive, the increased applications at least makes the college look more competitive to both students and the general public.
While I don’t think colleges as a whole are going to benefit from reduced applications, some groups of students could benefit in theory from fewer applications, such as not high income students for whom the application fee is a significant burden. However, charging increased fees for more applications negates that benefit – rich kids can apply to many colleges without issue, some groups of middle/lower income kids may need to think more carefully about applying to more than 3 or 8. It’s also not that much more than HYPSM… type privates already charge. For example, Stanford charges $90 to apply (assuming no fee waiver). I doubt that increasing from $90 to $100 is going change much. Having an application fee structure that is not proportional to the cost to review applications also could result in new challenges in funding the cost of application review.