I may be the one reader here who agrees with you.
Where I am, most SLACs are struggling with interest and enrollment. The top 2-3 schools in my upper Midwest state are still doing OK. They are filling, and they have not had to drop student quality. One of them (a T10 LAC) even has a lower admit rate (20%) than when I attended ~35 years ago (when admit rate was 43%) although I think the lower rate reflects an increased denominator due to the ease of applying under the Common App rather than any true increase in selectivity.
But anyway, other than the top 2-3, LACs in my state are struggling. It used to be that many top students chose school 4, 5 or 6 but now these schools are approaching open admission and are on the lists published each spring of schools still accepting applications because they didn’t fill.
Where are students going instead? Well, the biggest competitor seems to be our state flagship. It’s located in an appealing big city. But 35 years ago, we were in the middle of a crime wave, and the area around the U was seen as dumpy, gritty and kind of dangerous. Other competitors seem to be the flagships of other states, and private universities located in appealing cities. For example Columbia (and Barnard too..let’s just admit it’s not an LAC, it’s a division of a University) were viewed ~35 years ago as having an unappealing location–gross, dangerous. Not now!
As for your contention that the education at LACs (at least the good ones) is better quality, I’m going to agree with you on that too, with some caveats. I went to med school and found the classes to be very easy. My preparation was just head and shoulders above that of many of my classmates. This included classmates from Stanford, the Ivys, flagships etc. Very few of them understood how to actually read a scientific paper and analyse its strengths and weaknesses, very few understood the process of designing an experiment including planning for statistical analysis. This was something we were required to do from Bio 101 onwards at my LAC.
Now can you get a great education at big universities? Yes, I’m sure. Do Ivy+ universities have amazing resources, cutting edge research, and star lecturers who fill 500 seat lecture halls due to their brilliance? Yes, absolutely. Have some kids always preferred big schools, while others preferred small? Sure.
But let’s stop gaslighting the OP here: the overall trend is away from LACs (especially rural ones) and toward bigger schools, urban schools, and schools with preprofessional majors.