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I think that if we buy this argument, the solution would be for the government to directly run its own public supply with 0 or controlled nonprofit tuition costs, the same as they do with the water supply and public schools, not subsidize the costs of private universities. If the government just says "every college student gets $50k towards their tuition" and applies this equally to all schools, then the long term result is that all colleges raise their tuition by almost $50k, because that's where the new market equilibrium lies.
If instead the government has its own free universities, then all of the fancy ones need to offer a better product with cheap enough tuition in order compete.
You can't just subsidize profit-maximizing companies and naively expect them to divert all of the extra money towards the customers. That's like trickle down economics fallacies but worse.
This wouldn't work either.
Adding a free college option means that a college education is the new high school education. Students will have to waste 4 (or more) years in another poorly-run government institution or be forever marked as suitable for only the lowest employment.
Billions of person-years, and trillions of dollars, will be wasted by low IQ people struggling over book reports while the labor shortage gets even worse.
We need to stop spending government money on positional goods, and yes that means drastically reducing existing spending on post-secondary education:
https://en.wikipedia.org/wiki/Positional_good
In countries with government provided free higher education there is a contest for limited number of places in specific programs. In Russia people who get free college are generally smarter than those who pay for it.
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