This is more or less how things worked where I lived in Italy, but I'm not totally convinced. There's still an 'opportunity cost' to going to college; for that and other reasons, it's still more an institution for middle/upper class kids. So they're taking advantage of a subsidized benefit more than those who aren't so well off, which is a bit perverse.
Also, while I think kids in US schools are treated way too much like paying customers, it seemed that in Italian schools students were seen in some cases as more of a burden to be dealt with.
I don't know what the best answer is. I'd happily take Italy's health care system, because everyone either uses it or has the potential to.