The Mormons have something similar, and it has been very successful. They call it the Perpetual Education Fund. Patterned after the Perpetual Emigration Fund back in the 1800's, but they have learned some lessons from it. They have arranged to eliminate a lot of the possible ways to game the system, although not all of them. There is no way their system would work with the general public, or in the United States, but it has blessed a lot of lives.
The original fund came from donations. They announced the idea in General Conference back in 2001, and hundreds of thousands of people got excited about it and donated money. Twelve years later almost 60,000 people had gone through the program.
The loans are made from interest only. The capital of the fund is never touched. So it won't run out. It may decrease in value as inflation makes education more expensive, but the capital is protected. Even if the recipients slack and never repay. If they DO pay it back (which seems to be the norm), the payments go to the capital, increasing the fund.
Loans are made to people in very poor countries who otherwise would never have the opportunity to get advanced education. In those places the education doesn't cost very much. Relatively. The average loan is $800 and the average training program lasts about 2.5 years. To college students in the United States, that wouldn't even make a dent. But to them, it's huge.