Richard Vedder has spent more than half a century in the classroom. A distinguished professor emeritus of economics at The Ohio State University and a former advisor to Joint Economic Committee of Congress, Vedder has seen firsthand how the American higher education system has changed — and what it has failed to change. On The Overton Window Podcast, he explains the ways he thinks the system needs fundamental reform.

“Colleges are important. I think they're valuable. I think for the most part they're good. But we have to change,” Vedder says. That belief is at the heart of his book Let Colleges Fail: The Power of Creative Destruction in Higher Education, where he argues that the sector is propped up by decades of government intervention and insulated from market pressures that would otherwise drive improvement.

For most colleges, tuition from students covers only part of the bill. The rest comes from private donors and public subsidies. Much of the gap is covered by the federal government, though often not directly.

“Federal subsidies are mostly given indirectly, in the form of student loans,” Vedder says. He argues that easy access to government-backed loans has allowed schools to raise prices year after year without making meaningful improvements. “You can just go borrow the money from the feds so we can jack up the fees a little bit,” he says.

The colleges have developed a comfortable dependency on these funds. has discouraged necessary reform. “The whole process has been politicized, and the subsidies have prevented colleges from doing maybe needed reforms that they otherwise would have done.”

The lack of market discipline also means underperforming colleges are rarely forced to close. “The Midwest, and I'll use Michigan as an example, had a large number of state colleges and universities that have had enormous enrollment decline over the last 15 years that without those subsidies they would have closed.”

In most industries, Vedder points out, the market works. Companies that fail to serve their customers disappear. “And maybe that's a shame because when there's a threat of failure, it's really a real threat. People innovate, they change, they find new ways to do things.”

One of his central proposals is to make college more efficient. That could include offering degrees in three years instead of four and using the full calendar year instead of just two semesters. “There's this little school called Oxford University… How long do you spend at Oxford before you get a bachelor's degree? Three years — same all over the continent of Europe. Why not in the United States?”

Vedder also supports new legislation that would hold institutions accountable for poor outcomes. One proposed rule would end federal funding for schools whose graduates earn less than the average high school graduate. “If going to college lowers your income… they don't deserve to get federal money.”

Vedder perceives the current changes in education policy happening in DC as for the best, saying, “I don't think that's far enough, but it's a step in the right direction. I think the new bill, in short, made some positive moves in the right direction.”

As the political climate around higher ed continues to shift, Vedder sees growing space for ideas that once sat outside the mainstream. Whether reform comes from within or is imposed from outside, he believes change is overdue.

Listen to the full conversation on the Overton Window Podcast.

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