I agree. Let's take Boston as the extreme example of where one could choose a nearly "optimal" college while still living at home. Local availability of good education options coupled with the high cost of off-campus housing in the area probably makes the adverse selection bias I observed in Cleveland much weaker in Boston. In Ohio, off-campus housing is generally cheaper than living in a dorm room. However, I'm told that dorms are coveted at places like NYU because the universities effectively subsidize rents compared to market rates.