Joseph Stiglitz is a professor at Columbia University, the former Chairman of the White House Council of Economic Advisors, and a Nobel Prize winning economist. The professor is currently in the news for calling the American dream "a myth," and he also argues that spiraling student debt has a lot do with it. In advance of college graduation season, ATTN: spoke with Stiglitz to hear this thoughts on why education costs are increasingly mounting and what reforms are necessary to prevent it.

This interview has been lightly edited for clarity. 

ATTN: Why is college becoming so expensive? 

JS: It’s very hard to have major innovations in higher education in that we still think that, by and large, that the teacher-student relationship is very important. The main input -- the cost of that relationship -- is going up. Part of the reason it’s going up is actually related to the growing income inequality in our society.

Certain areas, particularly in science and economics, the teachers have the option of going to high-paying jobs in the private sector so schools are forced to compete and pay even higher salaries than they pay to teachers in the humanities. It’s almost inevitable that those private sector incomes will pull up incomes at universities.

A lack of state funding

Another big [cost driver] is that, especially in the aftermath of the Great Recession, incomes in the states plummeted and there was very little help from the federal government. The result is that many states cut back -- almost all of them -- on their support for state universities. And to make ends meet, most of the states had to have very large tuition increases.

On MOOCs

Some universities are exploring MOOCs to bring down costs, and I am hopeful, but those are just beginning to have an effect. I don’t view MOOCs as supplanting the teacher-student relationship, but I view it as a way of a amplifying it. [It could replace the large lectures where there is] “very little interpersonal interaction.” In many places, that big lecture could be replaced by a MOOC.  As MOOCs are used more and more, you’ll have the best lecturers in the world teaching students at all our universities.

Given deficiencies in our primary and secondary education system, universities often have the burden of what you would call remedial instruction. 

ATTN: You mentioned how universities must compete for the brightest professors; what about adjunct professors? Aren't they underpaid significantly-- around minimum wage? 

JS: To keep costs under control, what [colleges] have done is create this model where they -- and I hesitate to use this word -- exploit people at the bottom in order to compete for [professors] at the top. If they were to pay everybody the higher wage that those adjuncts are rightly complaining about, costs would be even higher.

I think [the adjunct pay issue] highlights the fact that education is an expensive service. It requires skilled people, and highly skilled wages are going up. The implication of all of this is, if we’re going to make this accessible to everybody according to their ability, we’re going to need public support.

That can take many forms. [For example, Australia’s income-particular loans] where the debt is not the yoke on your neck like it is in America. In the American model, the debt is so large and payments are so high that it is really affecting important life choices that young people are facing. It means they can’t get married, it means they can’t buy a house, it means someone who goes to law school feels like he has to go into corporate law [in order to get a high salary that will allow him/her to pay off their loan.]

ATTN: So what's the most promising way to deal with costs?

JS: [Many universities do research. That’s a public good. It’s also important that students are learning from people who are doing research. So universities should be doing research,] but we should not expect students to pay the costs of basic research, which is what they are doing today. So, the basic financial reform that l would like to see is that the federal government recognize the public nature of this research component that is so essential to our universities.

ATTN: Do you support the president’s free community college proposal?

JS: I do [support it], but I don’t think it goes far enough. After World War II, even with all that debt at a time we were much poorer than we were today, we could afford to send everybody who served the country to go to four-year, high-quality universities, most of which were far more expensive than community colleges. [Obama’s proposal] is a good first step, but we ought to go back to the premise we had after World War II that access to education is absolutely essential to the future growth of our country.

I think free four-year college should be our goal. If our budgetary situation were in better shape, I would say free for everybody, but we need to have free four-year college at least for those who would not otherwise have access.

ATTN: How do you stop free four-year college from subsidizing forever skyrocketing tuition?

JS: Obviously, we have to have a perspective on what are reasonable costs and we have to increase efficiency. We may have to look more carefully at the fraction of the cost that goes into administrative costs and see if we can trim. But if we look at the cost structure of colleges, we should [have the feds pay for research] which is the basis of progress for our society.

ATTN: So what economic reforms, in your view, should millennials advocate for?

JS: This has been the deepest downturn since the Great Recession, and we have not had a robust recovery, and Millennials are particularly affected. What does that entail? Increasing overall demand. What does that entail? I think that means we need to spend more on investments in infrastructure, technology, education, and a whole host of things that are major national needs. The weakness in our economy is caused by the fact that we’ve had austerity.