Actually Phds usually are free. A student that is operating at that level is usually more valuable to the university than the cost of their education. They TA classes and get published and build up the reputation of the school and help get research grants and all that, so more often than not schools either don't charge them or charge them very little.
As for how far we go, I think all education should be free. Of course, you should have to qualify for it. Not everybody is cut out for graduate level work, but everybody should be able to at least go to college. High school just isn't enough education anymore. It was 30 years ago, but it isn't today, and it certainly won't be 30 years from now, and people who are 18 today will certainly still be working in 30 years. It just seems pathetic to me that so many people are ready to just give up on the future and say "eh, whatever, we can just be a country of car wash operators and ditch diggers"... Come on man! Where is your patriotism? We should be striving for a future where we are leading the world in science and whatnot! Quit giving up so easy! You shouldn't be hoping your kids end up holding down the same kind of job your dad did, you should be hoping that your kids work in a field that hasn't even been invented yet doing work that you can't even begin to understand.
That makes zero sense. If kids aren't educated enough when they turn 18 that means they need more education, not less.
You just fundamentally misunderstand the whole situation... The goal isn't to weed out those who are less worthy or something lol. The goal is to try to build up as many people as we can as far as we can.