That's what parents are for - to be that 'soft place to fall'. As a mother of 4, I can't ever imagine charging my kids rent (heck, when I was married, my IL's stayed with us for 6 months when they moved to our town, rent free, until they were able find a place of their own), you help them out. And hopefully, if I needed help, my kids would do the same.
When my ex cheated and left me as a single mom of 4, I had to move in with my parents (at their urging - turns out later they just wanted the grandkids closer and lied to me about their motives for having me live with them). They charged me rent. And not a small amount either, it was almost the going rate for an apartment and was more than a quarter of my child support. In the meantime, I was trying to save up for tuition so I could go back to school, but it was nearly impossible, as my parents kept making me pay for more and more, as they complained we ate too much, so I had to pay all the groceries too, even though the original agreement was 'room and board'. Then they kicked me out because they decided they were sick of us, and I quote, "ruining their lifestyle". Luckily my ex helped me get some money together so I could find a place to rent on short notice. For the record, my parents are narcissistic (had a psychologist tell me as much) and are quite well off and don't NEED the money. And it's not like we were hellish roommates or something. My kids are all very well behaved (rave reports from teachers, friend's parents, straight-A students etc) and loving. Sure they were a bit messy, but I made a concerted effort cleaning constantly to help keep the disruption to my parents to a minimum. And my parents have a vacation home on a lake lot that they spent the weekends at, plus I took the kids to the park every night, so my parents hardly saw us at all anyway.
Put it this way - when I hear of a parent treating a child like the parent in the OP - no matter if that child is 18 or 20 or 24 - my mind right away thinks, "selfish parents, no empathy, probably shouldn't have kids, probably narcissistic and that child's life has been hellish behind closed doors" It doesn't 'teach' a teen anything to force them to pay rent while they are still in school. I'm not talking about 30-somethings laying on your couch or playing video games all day either - I'm sure there are times when a parent does have to put their foot down. This doesn't sound like that type of scenario at ALL When a child has hit hard times, or is still in school, your job as a parent is to help them through with minimal hardship to them (esp with regards to student loans).
When I was 12 and started babysitting for money, my parents said that now that I was making my own money, I was responsible for buying my own clothing. When I got my first job at 14, I was told now I could pay them back for the piano they bought me when I was 11 (a used piano, taken out of my savings account where my birthday money went as a kid) and my lessons. At 16, I saved up and paid for my own first car, and paid insurance and registration and gas on my own, no help at all from my parents. When I went to university, I won scholarships and had my first year paid for. When my second year came around, and I asked my parents for help paying my tuition (I was unable to get a student loan - as my parents made too much money), and I only had a minimum wage jobs that barely paid for my car (which I needed, as I was a 30 min drive away from the university, with no bus service), they said, "maybe you should've saved up for university all those years that you worked instead of spending your money on frivolous things." 
Some parents set their kids up for failure. The parents in the OP sound like those type of parents. Part of being successful is knowing you have people behind you who love you unconditionally. Parents who purposely make life more difficult for their kids (not talking chores here either, by the way) as they try to make their way in the world are failures as parents.
oops, sorry that got kind of long. I'm very passionate about this topic, as you can tell.
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