Most grad students do not pay full tuition, period. Many US students, and I would imagine those who get accepted to MIT most likely, qualify for NSF grants which cover the cost of graduate education. So your argument that MIT is acting as a "business to maximize its profit" is not very convincing.
I agree with you that some of the positions might be a bit extreme: the US is most certainly capable of producing highly qualified researchers, entrepreneurs etc.
Edit: One more point I would want to add is that currently, US universities, and the US itself, is seen as a very desirable place to live and do research. This might change if the country institutes a policy of (implicit) religious discrimination.
Most NSF grants and the like are for PhD students (the university still welcomes the funds they bring in, but they are a relatively small portion of income).
Universities make much more money off their Masters students, most of whom are international, and pay full tuition (or someone does for them).
I realize this is somewhat anecdotal, but still...
For MIT EECS (largest dep't on campus; ~700 PhD students) there's no Masters-only people (except MEng students who continue for a 5th year from undergrad). The department only accepts applications to the PhD program and funds its students accordingly. They probably lose money over their international students because none of them qualify for NSF fellowships, etc.
* Universities make much more money off their Masters students, most of whom are international, and pay full tuition (or someone does for them).*
It's a scam.
The Ph.D. is the real graduate degree in US schools. If you get a MS, people who know the system expect that you flunked out in quals (it's the parting gift for those that couldn't handle the work). Terminal MS degrees at serious schools are just outright selling prestige to the naïve.
A MS from MIT or Stanfurd is much, much less prestigious than a BS degree from the same school and requires less academic rigor.
I'm sorry, but your understanding of Masters degrees seem to be dangerously misinformed. There is a wide spectrum of MS degrees offered by US universities, from leading-to-PhD to Professional-degree-for-Software-Devs. I agree there are some who "flunk out" their quals and leave with a Masters, but the selection process for a PhD is stringent enough that this is a very small minority of all MS degrees.
Personally, a research oriented MS degree allowed me to work closely with a researcher and contribute to that research leading to paper publications and a thesis. The goal of the program seems to have been to allow people to get a taste of doing research and then move on to a PhD program if they found that appealing.
I agree with you that some of the positions might be a bit extreme: the US is most certainly capable of producing highly qualified researchers, entrepreneurs etc.
Edit: One more point I would want to add is that currently, US universities, and the US itself, is seen as a very desirable place to live and do research. This might change if the country institutes a policy of (implicit) religious discrimination.