I don't agree with that at all. Yes, it is important that her daughter do what she wants, but there is nothing wrong with encouraging her to think about widening her horizons, gaining new experiences, or going to a "better" university. If it's "superior" to want the best for your child and encourage them to get the best out of their formative years and their education, 99% of MN posters are snobs and superior.
FWIIW, OP, encourage her to explore the options and be honest and upfront about what you think, but without pushing those opinions on her. She is now of an age where she has to make her own successes or mistakes, but there is absolutely nothing wrong with providing some advice or opinion.
I couldn't wait to get out of my provincial town (pretty much as you described your city) albeit 40+ years ago. It was the best choice I made, and pretty much all the girls and most of the boys I did A levels with were married and staying local by the time I finished my second year. Half of them divorced and single parents within a couple more years!
My brother wanted to study in the local (10 miles away) city and my mother forbade it! She said that if he went he could forget about living at home, borrowing money, getting meals and laundry done - or coming home every week for all of those things. He wisely decided on another city 200 miles away - where he still lives, is happily married and has a family.
Of course that was all before student loans and the like. But I do believe that getting out in the world and experiencing new people and things is part of university, and you miss out on a whole experience if you stay local.
Obviously it has to be her decision, but that should not mean that you don't tell her the truth and why you feel that way. I totally get why you want more for her. She has a right to choose then. If it's the right choice, great judgement on her part. If it's the wrong one, it was her choice given all the information, and she lives with it. That is all any of us can do - own our own decisions.