For the top end (Ivies, Stanford, etc.)if by mushy middle you mean people towards the lower end of the top fifth you'd be right. For people who are from around the median tuition is covered by financial aid, and at least some of the room and board often will be as well.

Money is a real issue for the mushy middle who doesn't get the full benefit of tuition and costs assistance. The "solution" is debt as, more and more, assistance is drifting away from grants and towards loans.

Exactly the opposite for the elite universities with some   having completely eliminated loans in their financial aid packages.

If you're from a middle income family why would going to state U. be better than a Harvard or Princeton? In the former you'll get few if any grants, get loans for tuition, and have to pay for room and board. In the latter you'll get a free ride on tuition, all grants, no loans. Sure the sticker price is a hell of a lot higher at Harvard, but what matters is what you actually pay.

For grad school - you don't pay a cent at the elite private universities for tuition for Ph.D. programs, and you get a stipend added on. For law - different type of education - more theoretical, abstract, rather than practical at the elite schools whether public or private, and much better chances of landing that associate slot at a top firm with its solid six figure starting salary.  Unless your parents are loaded you're going to end up heavily in debt - not much financial aid available in law school - however, some of the elite private law schools will pay off some or all of your debt if you take a non-profit or public sector job (depends on your salary and how long you stay outside the private sector).

Not too familiar with the business and med school situation - my friends tended to either go for Ph.D's or to law school.  (For non Americans - law and medicine are graduate disciplines in the US, i.e. you must get a university degree before you can study them and it can be in pretty much anything you want)