I worked in higher education administration for 10 years and have actually consulted for universities facing these types of issues (I also have a master's degree in higher ed policy). Higher ed is not a bubble in the way people often think of bubbles. The value of a college degree continues to increase as more and more jobs require it as a bare minimum, and that's not going to change any time soon. A college degree is basically the new high school degree if you want a white collar job--it's a necessity, not an option, so demand is not going to go down based on any type of perceived bubble. Just look at the number of job postings nowadays that say "Bachelor's Degree Required" that didn't say that 30 years ago. I'm not arguing it's right, but that's the way it is.
People have been lamenting the increasing cost of higher education for nearly 100 years, but it still makes economic sense based on increased earnings over your lifetime. The only way demand will go down is if demographics change, i.e., if there are simply fewer people who are college age, and I've seen some projections that say that may be the case within the next few decades. That will certainly have an impact, but it won't be felt equally. Also, the online education portals that are being promoted so heavily are nowhere near the disruptive threat that they'd like to be.
As much as the public likes to focus on the richest and largest schools and skyrocketing tuition, a majority of people attend a state university or community college close to where they grew up. There will definitely be some consolidation in higher ed over the next 50 years, particularly with private liberal arts colleges. Many will close, others will merge. There are also plenty of other regional colleges that will likely falter, some due to internal financial issues, others due to factors outside their control (local factories drying up, people moving to larger cities). I certainly wouldn't buy property in those areas, but you also have to look beyond just the college itself. In general many colleges are self-sustaining within their local communities and are often the largest employer around.
I wouldn't worry about any of the top public or private schools. If you are investing in a smaller town with a regional college, just look at the same fundamentals as you would anywhere else. Is the local economy growing or contracting? Are housing prices going up or down? Are rents going up or staying the same? Is the college's enrollment growing or declining? (This information is public.) When you walk around the college, are the buildings in bad shape and disrepair, or are they expanding and building new buildings? More importantly, are they building any new dorms that will provide competition to local landlords? These will give you some clues to whether or not you should be worried. Even then, the issues most colleges face are longer-term, so if you're planning to hold onto a rental property for 10-20 years, you'd probably still be safe and could get out if you saw any bad signs on the horizon.
Also keep in mind it's not just students who rent, it's also staff and faculty. Even if the college's student population isn't growing, it's staff and faculty might increase based on its growth in research and labs. Something else to consider.
Interesting topic either way.
