This is a difficult topic
I'd like to consider some factors before even trying to answer the question
1. Private vs. Public Universities
The always-persistent debate between the quality and access.
When the Universities are private, they can be identified as companies. As such, they have to work for themselves, have proof that they are the best in their field. In exchange, they can ask for more money if you want to recieve education from them, and there is no one to limit those prices. Therefore, a certain elite of the best universities is created, to which most, even with good enough grades, cannot reach.
When you deal with Public Universities, ones that are state-controlled, many things can be regulated, such as the maximum price of a course. There is however a danger that these universities will not develop as quickly or will fall into stagnation, as they have no need of development. There is nothing to compete with, when all the biggest facilities in the country are public. I'd say that this is more persistent in case of centrally-ruled governments.
2. Whom we consider worthy of achieving higher education?
When we limit the number of educational facilities, that means that we will limit the possibilities of some people to get into a university. Of course, selection, to some extent, is needed. When everyone has a doctor's degree, a value of such is greatly decreased, it is not a sign of real education, just a piece of paper.
On the other hand, when applying for a university, in many cases, the 'first come, first serve' rule is executed. Therefore, you may be a student with great grades, applying just a day or two before the deadline (such cases happen) and be refused because there are no more spaces. The students taken earlier might not be smarter, might have worse grades, but they applied earlier. Therefore, a student with better abilities could be deprived of achieving education.
Those are the two main issues. I'm certain that there is more, I just can't think of any other. Obviously, in most countries the differences between the private/public universities are covered by offering scholarships, but the rule 'first come, first serve' applies there as well. Personally, I believe in the need for competition of universities, and I would be willing to pay much, even if I had to take a loan, if I had a guarantee that after finishing my university there would be job offers waiting for me.
Edited by Daedalus, Oct 12, 2010 - 18:59.
Being a grammar nazi, 7 spelling errors in one post were 7 too many.