You are equating non-free software and cloud SaaS. There is no reason the software can't be free and also be available as a cloud SaaS offering. This is exactly what Canvas, the application mentioned bt the gp, offers. It is free and open source software but most users opt for the cloud SaaS offering so that they don't need to host it themselves and take on the maintenance and IT costs.

I think it's unlikely that Stallman would consider a hosted offering of Canvas to be 'free software'. But I agree with you that it can be both SaaS and free.

Although at that point I question what advantage free software gives you - you can't change it and you are still at the mercy of the hosting company since you aren't able to host it yourself.

Paying someone to run something you can and in the future could run yourself could in theory be wholly compatible with the ideals of free software and user freedom.

UNC Wilmington had their Blackboard installation go down for nearly a week in 2018 because of hurricane Florence. I know that was a big factor in their decision to switch to a SaaS. Not that they couldn't have moved their stuff into a cloud hosting provider, but like you said, that's a big ask for an IT team to do in one summer when there are off the shelf solutions.

This is totally true. My institution is able to deploy software at schools because we are managing it for them. Sometimes we have to host on their own server, but we still do the deployment. Doing otherwise would lead to 100% rejection of using our software (ps: it's research stuff, not commercial).

Yes. This is a huge cost for school districts, particularly since both G Suite and Microsoft 365 are free for schools and require practically zero admin time. There's no competition in terms of cost here.