cedarbluffranch...you can incur significant liability from this unless you cover it well contractually and through your performance. A few examples...
Most beds are not designed by engineers; however, since you are a licensed engineer you are held to a higher standard of care than Joe Blow furniture designer. You now have a license on the line, whereas he has nothing but his assets. If you design a bed that has the same performance capabity as Joe Blow's bed and yours fails and causes injury or property damage, you now have a potential negligence claim against you....Joe doesn't have a negligence standard to meet so no big deal to him.
Next, if the plan is to be re-used, how long will this be done? It sounds like you will give up ownership of the design to the university, but you'll retain the liability for the concept and its implementation. That's not good contractually and you should avoid giving up ownership of your intellectual property. If you do so, you MUST make the design and specifications so tight that you will assure yourself that if followed, a failure would be almost impossible..can you do that?
The statute of repose for design is usually between 10 and 15 years in the states that address this. If your state doesn't have one...you're on the hook "forever".
You can limit your liability with good contract terms and conditions, but contracts are not foolproof and often get interpreted in ways you cannot imagine!
What are the standards you'll meet for the design? Are they established and nationally accepted? Do they actually exist?
There's nothing wrong with innovation and thinking outside the box; however, be aware that to do so opens you up to greater criticism and liability, often with your only recourse being through a tightly written contract, which unfortunately, you are not likely to get from a public agency.