Are the folks in prison really the same folks who would otherwise be attending the University of California? I think they're generally pretty different demographics.

Better K-6 education could probably decrease crime, if we can turn the illiterate, shiftless dullards who make up the lower rungs of society into literate and hardworking (if still dull) citizens. But this requires more a new educational strategy rather than just more money, and I don't know if anyone has thought of a good one yet.

At the risk of being pedantic, the study you cite is about educational attainment vs incarceration, not education vs crime.