This idea comes from Rahm Emanuel. Few years ago I picked up his book, "The Plan: Big Ideas for America", at an airport and read it on a flight back home. In it, him and his coauthor Bruce Reed, discuss all kinds of interesting ideas. The idea of 'mandatory youth service' has a whole chapter devoted to it. Rahm, who used to be a dual-Israeli citizen and spent some time in Israel, was clearly influenced by the ideas behind 'kibbutzim' which Wikipedia defines as "... a collective community in Israel that was traditionally based on agriculture. The kibbutz is a form of communal living that combines socialism and Zionism." Kibbutzim has been largely a failure and the number of people actually participating in them has been declining for a long time.

I doubt this idea will get much traction since it will have hard time passing the Constitutionality smell test. They'll need to heavily incentivize students into signing to something like this (forgiving some student loans?!) if it has any chance of getting any traction.