I think governments should make serving in government institutions mandatory for all students who study in government institutions - specifically professions like doctors, engineers and architects, but all graduate education ideally. I say doctors here, because it is the most urgent and visible, but the ideas are suggestions across all professions.
How many years the service should be should be clearly stated at the time of admissions (as opposed to imposed later, like now), so that people who don't like the idea can try for admissions in other places. It will also be good for people who do not like the pay, working hours, work load, working condition, facilities, etc to choose opportunities that suit them better.
For doctors and engineers, the time should be at least five to ten years. More would be fine too. Until a point where we don't have a crisis for such professionals, when it can be lowered - way far into the future.
This will encourage people who are looking to profit from the education to invest in creating those profit opportunities, rather than count on cheap education. It will also improve chances for the really poor people who can afford to live on government stripends and do not mind dedicating time to transforming the country.
It is a far better solution to the much resented quotas or complex evaluations of economic ability for reservations and will also help the government create doctors and other professionals who are at home in the rural scene where they are needed most.
It will also mean that poorer people from upper castes don't get discriminated against and that more poor people will have greater chances to change their lives directly.
I think this is a good idea, because it will help the poorer sections of the country, rural areas, help address the healthcare crisis, and importantly, turn the education from a favor to the student into a student's contribution to the country. A vital gift from the country and a vital service to the country.
Needless to say, such students will also have greater chances for becoming permanent in their government jobs, if they wish.
What about the many people who need the seats? Well, either you pay money in private colleges, or pay time in government colleges, if the time is too much, think if it as interest on the investment. You can always take loans and study where you like.
So, in this sense, it is actually a very capitalistic move.
All this said, education reform is still a necessity.