On the one hand I like the incentives of this, but on the other hand it further punishes the children of people who can't plan well.
Our current system tries to fill the role of the orphanage as best it can without taking the children away from their parents, and I don't think it works for anyone involved. Bad parents are enabled, poor kids rarely overcome their upbringing and continue the viscious cycle, well adjusted kids from stable homes have their education disrupted and often violence inflicted on them by the poor kids, and it only gets worse as time goes by.