This is why student engineering team projects exist. Solar Car, Formula SAE, Human-Powered Helicopter etc. Also, most mechanical engineering jobs are in fact not hands-on, are not "design this radically new machine" (more like "tweak this design so it meets slightly different requirements"), and certainly not turning a lathe (that's for technicians/machinists). Putting more design experience into an ME curriculum means taking out some of the analysis/theory (it takes a long time to build stuff, that's why engineering and manufacturing are separate departments), which is a disservice to the students heading toward pure research and academia.