Why does she want to be a physics major? It matters. Cal Tech would have an advantage for getting into grad school because of its prestige. But frankly there aren't nearly enough students applying to grad school now, especially women. If she does well in school and kills on the GRE, thats a lot more important than which undergrad achool she attends. I'd tell her to visit both schools and go where she thought she'd like it the best. Now grad school are more important.
Really? So you're saying that the quality of the undergraduate physics program at Cal Tech and iowa State are identical? There's no difference between the two?
I haven't actually looked at either program in either school, so I can't say for certain. BUT the chances that she'd be in any class taught by a world class physicist as an undergrad are very, very small. It won't happen. At Cal Tech, her classes will mostly be taught by TAs, for many of whom English is a second language. Which can be fine or can be difficult, depending on the TA and his or her English proficiency--and interest in teaching.
I went to a large research university and then later, a small university with little research and few--well, no 'big names.' I learned quite a bit more at the small university.
At the large school, I had extremely talented--actually brilliant-- grad students from various parts of Asia as instructors. I do well with accents, actually. But one of those instructors was quite difficult to understand because of her very heavy accent. She was brilliant. We all liked her. But her accent often bogged the lesson--and us down. By us, I mean everyone in the class, although we all liked her and admired her tremendously. Oh, that was a calculus class, so you would have thought that English skills were not as important. But at a certain point, they are.
Other instructors from other countries: quite variable. Some were assholes, frankly, including at least one American. They were over worked flunkies for big name researchers, struggling to do their own work plus whatever work the researcher deigned to throw their way plus work up something for a dissertation plus find people to serve on their committees and THEN they had to teach stupid little undergrads. They weren't necessarily good instructors and they weren't necessarily interested in teaching anybody anything, assuming they could find the time. Nor were the big name researchers. Some of the grad students were great; some of the full profs were great--in class.
Now, I didn't go to Cal Tech and I always found physics to be quite boring so I took as little of it as I could get by with. Maybe Cal Tech is filled with enthusiastic world class physicists who love to teach undergrads, but I doubt they go near a classroom with an undergrad in it. Not more than a couple times a year, if that. So you really want to know how good of teachers are the grad assistants and the non-tenured faculty and the adjuncts. I don't know that but based on my experience elsewhere in a different field, I would not bet on Cal Tech being the better place to learn.
I did end up also going to a smaller university with no big name researchers or big name grad program but a very dedicated set of professors who not only were passionate about their particular areas but also were pretty glad to be teaching students--and most were good at it. I was able to do research as an undergrad that I would never have gotten near as an undergrad at a larger university. Heck, at the big U, even the good (in the classroom) profs tended to be assholes if you tried to actually, you know: ask questions in class or see them in their office hours. At the smaller school, they knew your names, were quick to pull students aside and direct them to specific topics for research, talk to other faculty to help make sure you got in on a good project, and so on. They knew you well enough to write good letters of recommendation. And they did so gladly. Suggested programs for grad school, or places for jobs.
I imagine that it's easier to get good grades at Iowa a State, so really someone would be a fool to go to Cal Tech, because you need to work harder for the same result. You could be top of your class instead of in the middle with the same amount of work.
Yeah, that's what Cal Tech wants you to think. So does US News blah blah.
The best place to go is the place where you will feel most engaged and most inspired. Period.
Now, if she doesn't intend to go to grad school, there's no reason at all for her to go to Cal Tech.
As I mentioned before, Cal Tech would give her a bit of a boost because of its reputation but not because she'd actually learn more there. Great grades and great GRE scores will get her in to a grad program. In grad school, reputation really does matter but more importantly, the specific areas of study matter. If she is interested in a specific area of physics, she needs to seek out schools which have good programs in those fields. If she isn't interested in a specific area of physics, she doesn't need to go to grad school in physics.
Edited to add: It's Pasadena (which is basically LA) vs Ames, Iowa. That's a pretty big difference in place/atmosphere/climate/cultural opportunities/population density and so on. That can matter a lot. I'd send her to MIT, but then, I like the Boston area a lot.