Also, I'm sure it is correlated with paying so much for a degree. When a single year can cost tens of thousands failing a subject might incentivize the student to drop out, resulting in loss of a high-paying and otherwise reliable customer.

When there is no obvious reason, the purpose is always monetary in nature.

In Ontario (and probably other provinces in Canada), there is a strong financial incentive by the province to universities (in the form of tuition matching) to maintain a high retention rate.

Now that's perverse... It seems like our short-sighted vision is screwing us in realms of both finance and education.

On Cuba the higher education is free but if you study medicine you have to work a few years on a government assignment before you can even choose where to work and you may not emigrate. Sounds pretty draconian but compared with the cabal of the student debt system and the effect it has on the prices of the medical care, maybe not so much?

Could be. I couldn't compare rates, but the general trends seemed similar to me.