To me the difference in academics and graduate and career opportunities between Middlebury and UMich is negligible. Your son would get a wonderful education, enjoy graduate school and career opportunities and be exposed to significant thinkers in his field at either.
I’m a graduate of UMich (back when dinosaurs roamed the earth) and my son is a graduate of Williams which you’re probably aware is quite similar to Middlebury in location, academic rigor and overall culture. Both, I think are examples of the best of the American college experience. But the actual experience at a Big 10 midwestern university with about 50,000+ students and a robust international presence is quite different from the experience at a rural New England college with about 2800 undergraduates.
UMich was the wrong choice for me at that time in my life. I was overwhelmed and unable to take full advantage of what it had to offer. I don’t mean to compare my 17 year old self to your son. He sounds like he’d be up to any challenge! Ultimately I got a solid education and having lived in several US and international cities throughout my career, the UMich name has always been recognized and appreciated.
My son had a terrific experience at his New England LAC and would do it again in a heartbeat. Growing up he’d only ever lived in mega metropolises both in the US and abroad (and he’s back in a city now), but the bucolic natural environment, close knit community and nurturing faculty were huge pluses for him. Although graduate and professional schools recognize the value of a rigorous LAC education, name recognition, especially overseas, doesn’t necessarily follow.
My point is that your son will have to evaluate carefully the cultural and environmental aspects of each as well as the academic opportunities in order decide what’s most important to him in his undergraduate experience.
I second what @arcadia wrote “You can always go to a large university for grad school, but you’ll never have another chance to experience a liberal arts college.” This is what my son did, and his graduate program at a large research university made him value his time at his insular LAC even more.
I would note that the Monterey Institute is open to graduates of any university or college. (In fact none of the students that the Institute features on its website actually attended Middlebury College.) So Monterey would still be available to him if he attends UMich, though it’s unclear if he could start work in a Masters while enrolled at another college. I would also make sure that Middlebury would allow 1.5 or 2 years of study away from the Vermont campus.