Any time you open new facilities you run into costs and problems you don't expect
Fuck'em - that's called being in business. This doesn't impact on the idea of set costs for education whatsoever. If one college fails in business, then another college will pick up the students. Survival of the fittest weeds out the inefficient and bad planners. Insurance is a thing for a reason. Only if there's a system-wide shortage of a particular type of graduate or an overall quality issue, then that's an indicator that the amount invested needs to increase.
In this case I don't see how degree mills won't happen unless there's a cap on the number of teachers and their salary.
Degree mills happen under the current system. BTW, if you think that
teacher's salaries is the main problem with degree mills, you haven't really thought through the problems with higher education at all. A degree mill will have substandard low-paid teachers, with large class sizes, and eat up all the revenue with "administration costs". They definitely
won't have a high number of highly-paid teachers: that's actually symptomatic of getting a good quality education. What is your money meant to go toward if it's not going towards paying good teachers?
BTW, degree mills can currently set a low price-point, and sell themselves as bargain-basement degrees. If there were set state payments per student, then it creates a competitive level playing field: those who offer the
best education for that money will prosper and expand, those who offer a shitty education will wither. In other words, it's likely to be the end of degree mills as they're currently known.
You don't really see the same type of bargain-basement colleges in other rich Western countries as you do in the USA. e.g. in Australia if you study hard you can get into the best college for the same price as a shitty one ... why would you do that? That's why it works: it's competitive between
colleges because they want to attract the best students without paying more money, so they focus on efficiently producing the best education and reputation, meanwhile it's competitive between
students because they want to study hard and get a placement in the colleges with the best education and reputation. And the government merely sets a price at which the number of places offered by universities and number of students seeking places creates sufficient graduates to meet the needs of business. The government doesn't have to mandate which college offers how many placements or what students choose to study.