I think this is an OK argument, but it assumes that in a magical world where universities ceased to exist, the alternative would actually be less costly. Remem

I think this is an OK argument, but it assumes that in a magical world where universities ceased to exist, the alternative would actually be less costly. Remember, universities have fulfilled different societal roles over time. In the US they started off as Bible college, some of them gradually turned into quasi trade schools at the turn of the industrial revolution, and our idea of elite research universities really only reached full stride from Vannevar Bush's influence during WW2. Along they way, some of them developed lucrative sports programs completely unrelated to studying the Bible or building nuclear weapons. I would argue that if universities did not exist, they would be replaced by institutions that mostly do the same thing. The key question is whether the replacement institutions would cost as much. If there are the same sort of federal subsidies and incentives, the replacement institutions that replace the key signaling aspects of the modern research university would cost the same or more because the high cost is driven by the perceived market value of a degree and government loan programs. For the majority of non-elite students, the cost to get into such institutions for training, credentialling, exposure will be high. The real problem here is not universities but the fact that all majors are treated equally regardless of the expected economic outcome. An English major pays the same as an Engineering major despite drastically different ROI. This is an issue regardless of whether engineering and english departments are in the same institution or partitioned into separate non-university research institutions.