If you succeed, then you didn't need school. If you fail, then you can always go back to school afterwards. I don't see the downside of the Thiel fellowship, at least on its surface.
The perks of attending a prestigious university typically has nothing to do with your education. It has to do with rubbing shoulders with blue bloods, creating a powerful social network, and being able to woo people with the pedigree associated with the words "MIT graduate" on your resume.
I got a great college education and graduated with a level of debt that I paid off in less than a year, through a mix of need-based grants, merit-based scholarships, working 15 hrs/wk, and a lower overall tuition because it was a public school. (There's also the growing trend of 2&2 programs, which in retrospect seems like an even better choice.)
I'm not necessarily arguing that the value of college outweighs its costs (for me, though, it certainly did), but to say that the opportunity cost is at least a decade in debt is invalid.
But, I mean, let's get real. Take a good public school like University of Washington. 4-year tuition comes to $160,000 - if you life with parents [1]. Are you telling me that this is not a crippling amount of debt for a lot of people?
[1]http://admit.washington.edu/Paying/Cost#freshmen-transfer
From a financial standpoint, there's little difference (at least to my knowledge) between attending an out-of-state public school and an out-of-state private school. A more apt comparison would be looking at UW's estimate for Washington Residents who live away from home, which is $12K tuition and $27K estimated total expense ($10K of which comes from room and board. As someone whose alma mater quoted something like $13K for room and board, I can speak anecdotally that those estimates come from on-campus dorms & meal plans, which are awful; you're basically paying $15/meal.)
And, if you go a community college, which is considerably cheaper, you can then move on to a 4-year college. In some states, doing well at the community college, almost guarantees you admission to one of the good public 4-year colleges.