I read somewhere that some countries talked about giving each child, when they are born, something like $10,000.  Placing it in an account and letting it grow to hopefully offset some of the expense of post secondary education or technical training.  If they did not go after a certain amount of time it would go back into the coffers for others.  Not sure how feasible this is.  I like your idea though.

The other problem is that Universities are spending huge amounts on infrastructure - dorms with huge atriums and fire places, etc.  Like you said, they need to keep it basic and have the money used for education.