The economy actually needs colleges and universities, for purely practical reasons. They’ve been keeping about 15–20 million young adults out of the job market. They suppress unemployment.
If nothing else, affordable college was a holding tank for America’s youth. We kept them occupied and entertained.
This fundamentally misunderstands economics. There isn’t a fixed lump of labor that we want to save up for our favorite people.
We don’t want to warehouse adults because it’s doubly destructive. The students are out of the labor market not producing anything and the people babysitting them aren’t producing anything either. That makes us all poorer.