First, again, pull the plug on any additional taxpayer funding of college. Period. Grants too. If states want to continue their state university systems, which they will. Then fine. As it is, anyone can easily go through the associate degree level just as you suggest—live at home, and then work and/or study part-time if you can’t manage doing them both full-time. Do it year round, and part-time doesn’t take any longer than the average graduating student takes for supposedly full-time study now anyway.
But even after an associate’s degree, most systems guarantee credit transfers and acceptance to their state college system, within which such students can continue on to a bachelor’s degree (or more) if necessary.
I’m okay with four years of college for elementary school teachers, but I would have states ditch their master’s in education requirements immediately and also purge education majors at the undergraduate level. Those ed schools are what have pulled our educational system down to the sorry level it is at today.