I think that the rules need to be changed to make the money you receive contingent on going to and passing your classes. Rather than give $800 a month in tuition and such, I'd like to see government funded trade schools created specifically for people who are on cash aid. Let them go to the school for free. I'd even be for giving additional money to people who are in school getting A's and B's as an incentive.
So let's work on this idea, it has more specific parts, which unfortunately means I can point out concerns, but please understand I'm trying to see if they are show stoppers.
You'd like a requirement to only pay for success. What happens to the folks who fail? Example, my boss's son is using is GI bill money to do a computer science class. He's failing. badly. It's a mismatch, and he doesn't have the right stuff. GI bill has rules, that if he fails, he can lose the whole enchilada.
Shipping "candidates" to a special school isolates them. That kills any networking chance they would have had by going to the same school as other people. Not just in what school the recruiters come to, but also in meeting people from better walks of life and seeing role models for higher classes of living. It also may have the issue of stigmatizing students from there (as in "oh, I see you're from GovSchool, those guys are low class")
I suspect its valuable to set deadlines/goals for these candidates, which is what I think you're aiming for. Somebody can't be a professional student to suckle at the government teat forever. But we might need a little buffer on what failing a class or two might mean, as a student tries a study, sees they suck at it, and needs to switch majors. That's actually what failure should mean, is that you're in the wrong program...
Are any of these concerns show stoppers, or can the idea be shifted to better handle them?
I'd be more in favor of paying to put candidates into existing schools. perhaps not harvard, but the US has plenty of schools already with more reasonable rates and decent results. Blending these people in with existing population will give them mentors and peers they can look up to and perhaps connect them. It's hard to get out of the ghetto when everybody you know lives in the same ghetto.
What if everybody got a bucket of money to spend on school. Your choice on when/where to go, so long as the money is spent on tuition, room & board while enrolled. It lasted 5 years because it's handed out on a per month basis while enrolled. Bonus on any money not spent providing you get a diploma.
One kid could go to harvard, where this supplements his loans, scholarships. Still owes money to Harvard, but much less.
One kid goes to welding school. Gets done in 6 months, and gets the rest as a bonus that he uses to buy a new truck (with warranty) so he can reliably get to work.
One kid goes to A&M, mostly covers his bills, gets a small loan to cover the gap and graduates with a BS in 4.5 years because he flunk a math class and retook it.