I'm all for "learning for the sake of learning", but the federal government doesn't need to subsidize it. Losing federal aid is not the same as not permitting colleges to run the programs at all. Supply/demand is still alive and well.
You could say the same about all government programs, including pensions and defense. Yet somehow popularly-elected governments keep finding themselves maximizing public utility. A curious property indeed.
Also if they do subsidize it it should be in the form of public goods (libraries, publicly available research). There's some overlap there with loans to individuals but it's weak.
But the return on that subsidy is positive so why not do it?