If that's all it is, there's got to be a way to come up with something that lets someone prove they are willing to do something for 4 years, but only costs maybe $250 a year.

This is mostly a problem of the Anglo-Saxon world. In continental Europe, for the most part, at least AFAIK, publicly owned universities are harder to get in, harder to get a degree from, and valued much more in the job market. The upside is that the education is subsidized by the government to the point of being roughly that expensive.

I.e. one enrolls in a privately-owned, for-profit universities if they have the money, but don't want to work their arse off to get a degree, or don't have good enough grades from the secondary education to qualify for public unis.

While they area bit more expensive than that target, universities that focus on credentialing without doing much of the rest already exist (e.g., Western Governor's University).

Remember that lots of student debt isn't necessarily on tuition fees. I went to university for 4 years with "low" fees (started at €1750, ended at €2750, now €3000), but renting a room in that city will cost you 5-6 hundred euro a month, plus other "normal " living costs like eating, transport (another €120/month). All while you're probably not supposed to be working. My loan was purely to pay for accommodation for my time there.

MOOCs will make that happen within a decade's time.