[yummypaint]

If you intend to get a graduate degree, you should go to Z for undergrad. If you have a PhD etc all that matters is the graduate institution associated with it. You will also be much better equipping to benefit from the opportunities at a research university as a grad student.

There is a good chance that the quality of instruction you will actually receive as a student will be better at Z. MIT professors have to split their time a dozen ways, and much of it isn't directed toward undergrads. Look into the actual professors you might be taking at both schools. Do they involve undergrads in their research? Are classes taught with pedagogy that appeals to you?