It is the question of "to what degree?" rather than "whether or not?". Of course, public school and other public institutions have been pro-corporate-capitalist, but at the same time they wre PUBLIC - meaning having to adhere to public rules and regulations that at least in principle retain some semblance of equality and fairness. A private institution does not even have to adhere to those minimal standards - they can do what they want, exclude whom they want etc. without being publicly accountable for their actions. Just like no-one is held liable for not having enough friends from different ethnic groups. That is the main attraction of privatization.
As to your faith that market can create more meaningful choices than state monopoly - I understand that it is the cornerstone of the US faith, very difficult to debate, just like debating the existence of the holy triplet with a catholic priest - but it can be argued that market forces level off all diversity in the same way they level off diversity in price (cf. Bourdieu, _On Television_). Indeed, the "choice" the US commercial culture creates is twenty brands of toilet paper, and two indistinguishable political parties - fewer parties per capita than under Communist regimes. Choice - that most fucked up word in the US vocabulary - translates: you can choose where your choice does not matter, but where it does matter - we will choose for you.
More seriously, what makes you to believe that the mindless instituitional mimickry (following the leader, streamlining, implementing efficiency and all that bullshit of the management-babble) the market forces create will provide you with more choices than government patronage of minority rights and cultures against the tyranny of the majority?
wojtek