This can be accomplished in two steps using Select By Attribute and Select By Location in ArcMap. First, select all villages having greater than 500. Then, "remove from currently selected features..." the villages that have colleges in them.
If scripting, something like:
arcpy.SelectLayerByAttribute_management("villages","NEW_SELECTION", "population > 500")
arcpy.SelectLayerByLocation_management("villages", "INTERSECT", "colleges", "", "REMOVE_FROM_SELECTION")