For Whom Do Colleges Exist?

Seth Roberts poses a fantastic question:

I had never heard it put so clearly. We can ask if governments exist: 1. To improve the lives of the governed. 2. To employ the governors. 3. To help other governments. Similarly, we can ask if colleges exist: 1. To teach the students. 2. To employ the teachers. 3. To help businesses who will eventually employ the students (the signalling function of college).

Suppose we believe that the main function of colleges is to teach the students. How, then, should we improve colleges? By giving mini-grants to teachers (as is done at UC Berkeley, where I teach)? By giving awards to the best teachers (as is done at UC Berkeley)? Or by doing something quite different?

Reminds me of the provocative book What Does It Mean to Be Well Educated?.