And drive up the rent in the area such that college kids can't afford to rent anything?
If rent increase beyond what is sustainable for college students, it will force the college to invest in more affordable on-campus housing options (Or college-owned, rentable apartments).
TBH I can see an argument for a college student living at home with low expenses, a job, and/or plenty of loans having more disposable income than 90% of the population. But I’d hesitate to call that the average student experience. The average student income seems to be around $25k/yr as best as I can find on a quick search.
I don’t see how the math works out for your average student to have more disposable income than someone making 300k/yr. How does that work?
Taken to extremes, this is an absurd claim. Lots of college students pay for their own expenses and are obviously very sensitive to cost. But you generally do see higher rents and worse housing in college towns.