Wow.. I guess I'm a little shocked at how this affected you. Helping students build a portfolio is "the worst possible advice"? I remember when I was in school, finishing a degree and running through the hoops of getting hired. Everyone wanted to see my portfolio. Luckily I had done free work for a CPA, a church and some others that I cannot remember. Guess who got hired? Yep! Me. Probably not because of my amazing GPA or fancy suit. I'm betting it was actually showing work I had done for clients.
Now that I own a web development company, I ask the same questions. Let me see your portfolio. Free work means dedicated and willing to learn just because learning is there. It also means I'm hiring someone that cares about something more than themselves. It also generally means that they less abrasive and capable of dealing with a multitude of clients.