I don't think it's fair to compare an arrangement at zero up front cost risk to the student to a full up-front cost risk to the student (where the loan also hurts his credit rating) dollar for dollar. Are you also factoring in the NPV? Inflation?
It's not a full up-front cost risk to students. Federal loans (90% of disbursements) qualify for income based repayment where the maximum you will pay is 10% of income above 1.5x the Federal poverty limit. If you end up stuck as a barista making $25k a year, you'll pay back very little of the overall cost over the 20 year repayment.
Also if you get through a few semesters at an accredited university and decide you hate it those credits will generally transfer somewhere else. The same is not true of unaccredited programs.
