It all depends on what rules there are, and how they are enforced/interpreted.
Maybe it's because all of our schools are public? For example higher ed. providers are funded based on enrollment and rate of graduation. If someone does not graduate, significant chunk (20-30%) of money won't be paid at all. This creates some incentive for the institution to actually guide and see that people don't fall through all kinds of cracks. I guess it's necessary when there is no ordinary paying customer relationship involved.
The main problem, in my view, is the professionalization of this institution-hopping class of university administrators. It used to be made up of senior faculty who got promoted to Dean, but now it's made up of an entirely separate group of people, often people who come from business management backgrounds, and who have little grounding in a particular institution's traditions or culture. They tend to think rather differently, in a more locked-down, policy-driven way, and apply broad "best practices" without much regard for how things are done in a particular place. Universities end up getting managed like a corporation, with similar kinds of policies.
Things are a bit better at small colleges (Rose-Hulman, Olin, Harvey Mudd, Wesleyan, Pomona, Colgate, etc.), which typically have much lighter-weight administration and a more pro-student, pro-experimentation attitude, as well as more success in en-culturating their administrators so they "get" the local culture and work with it. But they don't scale very well (I say this despite having gone to one and being a big fan of the undergraduate-college model).
Ministry of Education controls the money and conducts yearly performance target negotiations bilaterally with each higher education institution. You actually need a permit from the ministry to run any kind of school. Even our few "private" primary and secondary schools are publicly funded and regulated accordingly.
Independent expert body FINHEEC audits universities quality management schemes regularly. Some European countries use accreditation-based evaluation (for single degree programs) instead of system wide audits. At least one Finnish university has also acquired ISO 9001 cert, but it was seen as more labor intensive and not providing the same benefits (benchmarking, benchlearning) as the required peer-based audits.
There are Asian countries where this model has failed. Perhaps because of population pressure or other social factors. But I truly like the Nordic way of life.
For me, it was a way to steal the AFS space of the previous user (basically, they didn't expire the token... oops). I actually found the initial vulnerability by accident (something crashed due to network problems, reconnected and went, "WTF, those aren't my files!"), but I did find a good way to reproduce it on demand (yank Ethernet cord at proper time). Thankfully, I had read enough stories like this way back then and submitted the bug anonymously. This was ~2000 or around then, mind you.
I also tried to get university management to switch people over to using SSH way back in 1998, but it was something like 4-5 years before they eventually did so. I'm guessing they had no idea what I was talking about or why it even mattered back then, even though anyone could see everyone's passwords going over the wire with all the people who had to telnet for various reasons. Maybe they assumed that log file they were writing our activity to would catch anybody doing anything weird? It was cleverly named "resugol"--read that backwards if you're confused.
FWIW, the exams are quite thought-provoking nearly 10 years later, here's a link to them: http://cr.yp.to/2004-494.html
Here's a reading list; I'd add Zalewsky's _Tangled Web_ to it, but change little else: http://amzn.to/cthr46
I remember reading the course syllabus online and being jealous despite already having worked in professional vulnerability research for a few years. You're lucky to have been at the class! Was he a good lecturer?
Next semester, though, I refused to sign the new AUP (which included a clause allowing the computer center staff to seize any computer I was using, even at my off-campus home), and they kicked me out of school. (Actually what happened was they locked my course registration account, and wouldn't reinstate it until I signed the policy in their presence. I refused.)
(Sadly, I can't find the full-disclosure thread for this bug. I guess I posted it to my blog, which I deleted after being threatened by school administrators. Oh well. That was 9 years ago!)