I went to a college where housing was guaranteed (and all but required) for four years.  95%+ of undergraduates lived on campus in dorms.  I loved it.  My wife couldn’t stand it.  She was part of the <5% who lived off campus, starting in the second semester of her sophomore year.  But she was still required to have a contract to have some meals on campus, and she was happy with that.  (In no small part because that’s how we met.)
When our kids were looking at colleges, I assumed that was the best system.  Both of our kids wound up at a college where dorm housing was guaranteed for two years and required for the first year, but the vast majority of kids moved off campus by their third year.  (As a practical matter, housing was guaranteed for all four years at the time, because so few upperclass students wanted it.)  No one, or hardly anyone, was “commuting” to campus.  The students lived in apartment housing within easy walking distance of campus, and there were university shuttle buses, public transportation, and some large buildings had private shuttles, too.  University police patrolled most of the area where students lived.
Both my kids hated the dorms, and moved off campus after one year.  They vastly preferred living off campus – they had much nicer space for less money,  they preferred their own cooking to eating in the dining halls, and they really appreciated having quiet space to come home to, which was not the case in the dorms.  Campus was still the center of their lives, and they spent most of their waking hours (and some napping hours, too, I’m sure) there.  There was no social cost to living off campus.
(I will say that the college changed its dining hall policy when my younger kid was a senior, to make it hard for on-campus students to invite off-campus students without meal plans to eat with them in the dining halls.  That had a clear deleterious effect on campus culture.  A club sports team that had been an important part of his social life split into on-campus and off-campus factions, because they could no longer all have dinner together after their practices. It was a stupid, short-sighted thing for the administration to do.)
Having so many students living off campus encouraged local landlords to invest in the neighborhood, and student-friendly businesses to establish themselves there.  That was great for the university.  There was much less of a town-gown divide than the somewhat similar city where my college was had.  My kids did have to sign 12-month leases, but except for one kid/one summer they wound up spending their summers in the city where they went to college, so they got the full benefit of the cheaper housing.  The one summer a kid didn’t live in his apartment, he was able to sublet his space for about 75% of the full rent, so we still saved considerable money on his housing.
My kids’ college is clearly trying to build enough on-campus housing to guarantee housing for four years, and perhaps even require it.  I think they are doing that because they recognize that many applicants and their parents have the attitudes expressed here.  But they aren’t close to building that much additional housing.  My kids clearly preferred living off campus, and seeing how their experience played out I wondered why I ever thought living on campus was so great.