[Theoria]

Yes, and those salaries and other costs would be limited because of less grants, and other forms of aid from Gov't! See the cycle?

As for bankruptcy, yes the loss is factored in. And it happens everyday. Bankruptcy is one of the reasons America has a great innovative economy.

[sthguard]

No, they really wouldn’t. The majority of a given college’s budget comes from non-govt sources, and most grants come from industry.