It would also mean that people who are 20-something and educated locally are less likely to have large student loans to repay too. They would pay more tax compared to the US, but need to spend less money after tax so it should even itself out.

This is not necisarilly true. As a student in Sweden I can explain how our system works.

The university is free for swedes and europeans (might only be free for schengen countries). In Sweden we have a government agency that controlls student loans and subsidies (the agency is called CSN, Central Study Board). As a Swedish citizen you have the right to a ~2000 SEK (around 300 USD) per month subsidy. So just by attending university you get 2k SEK each month (this is limited to I think 12 terms in total, i.e 6 years), this is something you don't have you pay back.

We then also have the right to a student loan which will push up your monthly "earnings" to ~8000 SEK (1200 USD). This loan you obviously have to pay back. The current plan is that every student that took a loan before 2001 have 25 years to repay it.

Students that live at home during the duration of their study time can get away with only taking the subsidy. But most student (at least those that I know, including me) have to take the student loan.

Interesting, that's something that's different in Denmark. The Statens Uddannelsesstøtte (SU) is 5500 DKK (around 1000 USD) per month. You can additionally take loans, but most students don't; they just live within the SU amount, often by living in one of the fairly cheap university dorms. It's getting more common for students to supplement their SU with freelancing or a 1-day-a-week job, though, especially masters students in areas like tech or design.