[mmc]

I went to UCSD about 10 years ago, and have lived in the area since.

If we're talking about new faculty, who probably want to buy a house and may want to live near campus, I'd agree that UCSD's location is problematic financially. They seem to be able to attract solid faculty at least in engineering (the people I know), so they must be figuring this out somehow. Certainly some professors are living in small condos who would be living in big houses in the midwest…

However, most grad students while I was there managed well enough. If you don't have kids, and are OK with roommates, you can find places near campus or a short drive away (e.g. Pacific Beach) that are plenty affordable.

I don't really believe that any grad students avoid UCSD because of the cost of living - in a place where you'll only spend a few years and then probably leave.