This is handled in most other countries.
Yes, the cost is no longer an object to the student, however it doesn't mean the costs are paid in full arbitrarily.
The absolute costs repaid to the institutions are capped and based on attendance, pass-rates, student-count, etc.
And, it's also a fixed $/head count as well.
In Canada, this issue happened in the 90s when they were still phasing out Private Health Insurance for the Government Subsistance.
Basically came down to:
We'll pay you $100. BUT -- If you charge any co-pays, co-insurance, or any other administrative fees. Those will be taken out of your payment. (And finances sometimes dictated that their future payments are basically $0 untill everything they charged was cancelled out).
The net effect was they cut costs, and increased efficiencies -- more importantly, they cut salaries of the doctors, getting them in line with other professions. (10 years experience as an Electrical Engineer? You make 65k**. 10 years experience as a doctor? You make 75k**, etc.) It stopped wage inflation, which is good for the person, bad for society.
If they do the same for the College system here, it will have the levelling effect lowering salaries, and thus reducing the income gap. And keeping the costs under control. Some colleges will transistion poorly, others better; and there will be years of painful transition. But, in the end, the net result will be positive.
Though I'd say that the system should basically be:
Income is taxed at 3% while you're taking classes.
Income is taxed at 3% for 20 years of being a non-student.
You can go back, but then that 20 year time-frame resets itself.
With the average US salary of people over 25 being $35,000
That would mean on average, people would be paying about ~20,000 into the system.
Which is about the out-of-pocket cost for a degree in Canada at a 4-year university.
It's a good idea, the politicians just need a damned backbone to say :
That's all you get, lower salaries for the professors if you need to make ends meet.
If the health-care system was able to do that, the rising cost problem wouldn't be an issue.
But becasue insurance companies don't all band together to say "fuck you." doctors continue to get paid exhorborant amounts compared to doctors in most every other western country. Doctors in the US make on average 150-380k/yr depending on being GP or specialist. Doctors in Germany, Canada, Japan all make a (still very well off) 80-100k a year.
If you were able to take off $50,000-250,000 per doctor per year in this country, the health-care costs would quickly fall in line.
But people are too fucking greedy.