Given that many people also think that the cost of US universities has spiralled out of control, why would you pump more money into a system that is already awash with money (largely from the easy to get student loans that so many are saddled with for years)?
I've started to wonder if a rebate system would help actually control costs. Basically Medicare for Colleges. For those unfamiliar, healthcare costs have been rising like crazy for more than a decade now but the cost increases are the smallest for those who use Medicare because they have price fixed reimbursement rates.
Suppose for a moment we attempt the "free college for everyone" that seems to be popular now. Except instead of sending $60,000/year in taxpayer money to Harvard to take in as many students as they can, the system is a reimbursement system managed through each college's financial administration office where they currently collect tuition money. So you take out, say, a $10,000 student loan that acts as a float account. You sign up for 15 credit-hours of classes at a cost of $492/credit-hour. So $7380 is deducted from your student loan float account. You pass all your classes but one, at 3 CH/class. The government reimburses a maximum of $500/credit-hour for each class you pass. Since you passed 12-CH worth of classes, the government reimburses your float account for $5904. The class you failed does NOT then cost taxpayers money, and in the mean time you still got $5904 worth of college credits at taxpayer expense. Your classload only cost you $1476 for the failed class. Pass all your classes and your float account is right back up to $10,000 in it.
Now suppose you do a postgraduate program at $850/credit hour. The same rules all apply. It costs you $12,750 up front (so you'll need a larger float account) and you get reimbursed for $7500 after passing all the classes, bringing your out of pocket cost down to $5250. Since postgraduate degrees will statistically put you in a higher earning bracket, you should be able to justify this, especially since people justify it today even with paying 100% of the cost themselves. Alternately, THIS is where grants and scholarship money can come in to play, rather than paying just basic degree tuition.
So back to Harvard. A quick check says it's $1166 per credit hour. This is where people make the real decisions: Do I go to state university where I can get a degree for free, or do I spent a crapload of money to go to Harvard? Currently, I think people get suckered into spending more because they figure "Hey, if I'm going to get into debt, why not get into a LOT of debt?" We could instead frame the discussion as affordable colleges being FREE and the expensive colleges cost you a bunch of money. That provides an incentive for state universities to hold their tuition costs at just barely below the legal reimbursement limit so they can continue to advertise that they offer free college.
It's also possible the law of unintended consequences will kick in anyway, and colleges which were previously $500/credit hour will raise their rates to $1000/credit hour, on the grounds that if people could afford the $500/hour, they can still afford $500/hour and pocket the free $500 from the government. I suppose you fix that by setting a phase-out limit. Such as you only get up to $500/hour, but the reimbursement decreases for costs over $500/hour. You'll also then have to put a regulatory limit on the cost of books, fees, taxes, etc. Otherwise it will be like old school land line phone bills where the landline is $9 but you have $18 in taxes and fees.