I have an MS in engineering and work in a senior management position in engineering. Strange as it may sound, I've always said that I could have worked my first five years in this profession right out of high school.
Yep, the greatest thing we could do for education in this country is to replace diplomas with certifications. If I can walk in and pass the Bar exam, I should be able to practice law, regardless of whether I went to law school. Ditto for an engineering PE.
Employers could then weigh how much value they wanted to attach to a diploma and individuals could weigh how much value the education they were receiving really was to achieving the required credentials, e.g. perhaps reading and studying 6hrs a night on my own (or via the Internet) while working, is a better option than spending $40k a year.
The natural result would be an active apprentice system.