Just read through the thread quickly and I'm feeling:
1) Hatred towards capitalism (money just ruins everything)
2) Pity towards US
3) Happiness that I'm somewhere else.
Here, in Finland, all education is practically free. My tuition fee for master's degree is around 95€ (~$120). This includes membership to student's union (discounts at various places, cheap food etc) and access to near free medical service (It costed me 3$ to have my wisdom's tooth pulled out). I also have gotten few opportunities to work in few experimental projects with Nokia and their devices. There are no sponsorship system here, students have to pass an initial examination test to get in (all though, prior excellency in grades might actually give you auto-pass, but you'd probably would have passed anyways).
What I think of higher education:
1) It should be free (or extremely cheap)
2) It should try to reach as many people as possible
3) Degrees should not be criteria for hiring people
You see, the democratic process is heavily dependent on people being sophisticated and highly educated.
I can't say much about the situation in the US as I have next to zero knowledge of the system there. But what I'm hearing from Obama, there's something seriously wrong with the system and he's having some good slogans ("No family should have to set aside a college acceptance letter because they don't have the money.") at least.
Do you mean tax funded? I dont think that education can be provided for free, that'd be advice or some other sort of exchange but I dont believe lecturers or universities will function without money.
Anyway, there is a problem I believe in saddling individuals or families with increasingly obscene amounts of debt, while it seems good for the banks now it will not be long term as these individuals become so called "ninjas", ie no investments, no jobs or assets, cant service debt and can not qualify for any other financial products. Especially in the UK were there is a heavy dependence upon finance as the basis of GDP.
So I do think that something other than loans and credit should exist to enable access to university education, in the UK given the lack of support for taxation to subsidise students they worked a very good reform of the system with the bonds which would mature at eighteen, permitting payments for those who wanted to go to university to spend it that way and payments for those who did not plan that use however they saw fit and therefore no begrudging of taxation. At least in theory. No one understood it. No one supported it. The conservatives wiped the entire thing out at the stroke of a pen and suggested it was all squanderous and unaffordable anyway. Stupid electorate bought the lies.
With unemployment and available work being exactly how it is at present in the UK they need people to go into education and training to take them off the books as unemployed or unemployable too. The universities have fufilled this function for a while without anyone being prepared to acknowledge it. In the seventies or earlier people could walk out of schools, possibly with little in the way of qualifications or academic ability, and have the option of three or four jobs for life in factories, industry and production, not now.