We could do worse than to just send all high-school students to a community college, or programs structured like them.
Compared to universities, you're probably right. Most big universities reward faculty and grad students based on research, not on teaching. So faculty and grad students optimize what they're rewarded for, on average. (I made this point in an essay I wrote for students called "How Universities Work:" http://jseliger.com/2010/09/26/how-universities-work-or-what... ). If you want to get better teachers or instructors, the universities have to start rewarding staff for that. If they don't, they get what we have now: universities optimized mostly for research with an incidental sideline in teaching.
It doesn't help, too, that a lot of students aren't in universities for learning—they're in to party or hang out or burn time or whatever. But that's another subject: http://jseliger.com/2011/10/07/student-choice-employment-ski... .