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Funding - I'd take it all from general taxation.
It's pretty regressive to select one group of kids to put into a higher earning bracket and fund it with the public purse. The argument about paying higher tax rates is OK, but that still means 60% of the benefits of HE are accruing to the individual.
NickCJ
@jsabine
There's also the cultural thing of not valuing 'education' that isn't recognised by academic certificates, whether that's degrees or A-levels/Highers, and often not valuing professions that aren't seen as academic or at least built on book learning - accountants tend to be perceived as in some way superior to engineers, none of this Herr Doktor Ingenieur for us, thank you.
Funding - I'd take it all from general taxation. If you've done a degree and parlayed it into a well paying job, you'll be paying more tax; if you're in a less well-paying job then either there's a direct social value from how you're using your education (teacher? nurse? artist?), or there's an indirect value simply from the fact that you've had an opportunity to study, learn and think.
But we definitely need to find a way of revaluing paths that are not traditionally academic.