Sure, that's the narrative to manufacture consent from the naive, but I don't buy it at all. Perhaps for very small fledgling universities that makes partial sense; even then I am skeptical. For Harvard, definitely not.

At very least, if your endowment is growing on an inflation-adjusted basis, it does not appear to me that you need further subsidies; your primary business is to be an hedge fund and the treasury of an empire, not education for the masses. Gains should be taxed like a hedge fund at that point.

If you want to subsidize education as a society, there are much better ways: fund research directly and cut through the indirect cost crap (which was popular among academics up until the moment the current administration started advocating for it).