We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
I doubt this would work. Undoubtedly, somebody at the university would figure out that they could (a) increase the tuition such that even with the discount the net result would be the same - "rich" people, a.k.a. taxpayers, subsidizing the "education" of non-taxpayers, or (b) reduce the quality of the product such that the university was still upping its reward.
The best thing the government can do is to remove itself from the picture entirely. That will reduce tuition and make colleges responsive to those paying the bill - the students instead of politicians.
This is not freakin' rocket science!
(1) He who pays the piper calls the tune.
(2) Subsidies (in any form) increase prices.
(3) You cannot simultaneously decrease cost, increase quality and increase access (unless you believe in the hope and change fairy).