The problem I see is that the students with the most to benefit economically from college will see through this scam and choose a college where you pay a fixed amount up front. In addition, this plan doesn't address the realty that for many students (half according to a Harvard study) college is an economic loss, which translates to a loss for this plan. In the near term this fund will have to substantially raise the percentage of income required of its indentured servants in order not to blow up. I do think a plan like this could work if there were reasonable limits on the number of students in each field and these slots were filled based on merit and qualification.
In Florida (as in other states) dual enrollment is getting popular. In this plan, a student takes college courses (usually at a local community college) while still in high school. When they graduate from high school they then finish college at a four year school. I was generally against this because I felt that kids were missing out on a real (4 year) college experience. I have lately come to the realization that most of that experience (we remember)is gone anyways and a smart student is probably best served by getting through college as quickly as possible and hooking up with a smart company. This applies to most fields, even law and medicine. This is going to put even more pressure on the viability of the traditional 4 year degree experience.
I would like to be convinced that public colleges still have the ability to provide that experience (honors classes?) but I am not holding my breath.