College in America is an example of a market failure induced by government intervention.
Federal loan guarantees and special rules around student loans (critically, they are not absolvable via bankruptcy) have caused a distorted market, whereby the colleges are incentivized to compete with each other for these guaranteed loans. Remember the student is a child, likely 17. They almost certainly have never supported themselves financially, and almost certainly have no conception of what a $200,000 loan will look like 10 years down the road. So you have colleges who are _guaranteed_ to get $200,000 from these poor students. You'd have to be some crazy altruist not to exploit that!
However, imagine a world in which no such federally-guaranteed loans existed (and critically where absolvable by bankruptcy). In this case, no rational bank would loan a student 200k. The financials simply aren't there. Now students have to look around for funding options in the private market, which is only going to cut loans it believes will turn a profit: that is, loans to students who they believe will be able to pay them back.
We have built a flawed economic model here: it is guaranteed to fail. The only solution is to overhaul this market either via novel market design or via nationalization.
The choices of individual schools is mostly irrelevant: as market players, all they can do is play the game. The game is bad, and so the schools' decisions have bad outcomes.
