There are a lot of folks that buy good, brand name bikes that never use them, especially in college towns. I just bought a 2004 trek 4900 for $200 to use as a commuter bike. I threw some michelin transworld citys on for tires and a pan rack too. This thing looked brand new, with almost no wear on the tires. If you can find something like this, its pretty sweet.
You could post some flyers at the school too saying you are looking to buy a trek, giant, etc for under $200. Some cash strapped dude may take you up on it for beer/gas money.
I am of similar height (5' 12''), but a 32 inch inseam, and I've got a 19 and a 20.5 in framed moutain bike. Both work for me. If your inseam is longer than that, I would probably go with the larger frame.