Brett Kingstone started a small water bed business to pay for his Stanford tuition six years ago. Today, at age 23, he is founder of a Palo Alto fiber optics company expected to gross $1 million this year and five times that in 1984.

Walt Disney's Epcot Center is a client, and Kingstone has learned Japanese to help run his new Tokyo office. He has a book-publishing company and a fast-selling businessman's handbook, but in this California caldron of youthful enthusiasm and electronic wizardry, that is only a beginning.

John Halamka, 21, operates a $100,000 computer software business out of his basement apartment. David Hedman, 26, has turned a Stanford student-faculty report on earthquake safety into a $1 million consulting service.

In this and other university towns throughout the country, students have become so absorbed in the romance of innovation and profits that they are remaking a part of the U.S. economy.

Pressured by mounting college costs, depressed by terrible corporate job prospects and intrigued by the demand for better, cheaper goods and services, American students in large numbers are starting businesses from their dormitory rooms.

Dozens of universities, including Stanford, the University of Southern California, the University of California at Los Angeles, Baylor, Harvard, Dartmouth, Pennsylvania and Georgetown have accelerated the trend by introducing courses in entrepreneurship or creating entrepreneurship centers.

College campuses have become places for young marketing experts to meet young inventors and to find advice in modern business administration and the names and numbers of investors eager to take risks.

Small U.S. companies traditionally have produced most of the nation's jobs: almost 66 percent of all new jobs from 1969 to 1976. The nation's top 1,000 companies produced new jobs at only one-third the rate of the rest of the economy in the 1970s.

"We noticed that the start-ups of new businesses particularly increased when the employment crunch got tighter," said Joseph Shafran, spokesman for the National Federation of Independent Business in Washington, D.C.

The trend is especially noticeable in college towns such as this. New technologies generated by university research have been quickly exploited by small, innovative firms often led by former faculty members and graduate students.

"We're in a unique position to put together entrepreneurs and students because of our close proximity to Silicon Valley," said David Gleba, 20, a Stanford electrical engineering student.

With $1,500 in university funds, he has helped create a center for entrepreneurship in a ramshackle house at the campus' edge. It organized a recent entrepreneurs' conference that drew 1,200 persons and has a steady stream of visitors even though the waiting room couch is an old car seat and the building's third floor has been condemned.

The rapid blossoming of computer-based companies in the southern San Francisco Bay area known as Silicon Valley has fired many student imaginations, as has Stanford's eagerness to let young genius have its way.

Halamka, who began working as a computer programmer for TRW in sixth grade, was admitted to Stanford and Harvard in 1980. He said he chose Stanford after Harvard refused to let him major in public policy--a combination of political science and economics--and microbiology, as Stanford was more than willing to let him do.

When the double load of courses failed to fill his time, Halamka founded Colossus Computers, which grossed $100,000 last year. He began by purchasing cheap spare parts and making customized computer systems for clients such as the university's neurosurgery department.

When competition from large companies became too great, he switched to writing software computer programs for business forecasting. He serves about 20 customers from the basement in the home of the late Stanford provost Frederick Terman, with whom Halamka worked before the famed "father" of Silicon Valley died at 82 last year.

Terman once encouraged two of his students to found the Hewlett-Packard Co. He helped forge the university-business connection and the respect for young innovators that still exist here. Student entrepreneurs also find, Halamka said, that "running a company is more fun than going to classes," although Halamka said he was recently elected to Phi Beta Kappa, the national academic honor society.

Thayer Wendell, a Stanford business student, sports equipment entrepreneur and entrepreneurship center chairman, said the secret of success is that "you really need to start something you can get excited about . . . . Howard Head invented his tennis racket because he really wanted to play better tennis."

Hedman, a recent Stanford undergraduate in economics, said he encountered his most recent business innovation while working on a student-faculty project to write an earthquake safety plan for the university. Information he helped gather turned out to be so useful, he said, that he founded Epicenter, now based in a warehouse and projecting revenues of $1 million this year.

As chairman of the board, Hedman said, he leads a staff of 12 geologists, engineers and others who specialize in advising governments, businesses and individuals on earthquake safety.

More than 5,000 customers have bought the company's $75 home inspection for earthquake protection, and about 40 cities have availed themselves of the firm's earthquake workshop service for government officials and community residents.

Hedman, who grew up in San Diego and spent two years in Massachusetts as a Mormon missionary before entering college, said there was a time "when I was going to school from 7 a.m. till noon and then working at the business from noon to midnight."