Young people can learn to take care of themselves, and financing college is one place to start. Fall is a season when we learn a whole lot about the business transaction we call undergraduate education. On the one hand, perhaps at home, there's the nervy spectacle of the college-admissions process. On the other hand, there are the results of college: the peculiarly passive young people who need our help finding jobs, or fresh employees who herd into the workplace. "Herd" is the right word, for there is an agricultural feel to the hiring process, with young people sometimes resembling less men and women than credentialed domestic animals, "Excellent Sheep," to borrow the title of a current book by William Deresiewicz. Lena Dunham captures that same helplessness in the film she made after graduating from Oberlin, Tiny Furniture. The excellent sheep are deeply disquieting, given all the challenges we know they will face as adults.

Content is supposed to be their problem: Whole tomes depict the failings of the content of undergraduate humanities, one of the most notable being Richard Arum and Josipa Roksa's Academically Adrift. But there is another source of trouble: the destructive nature of college finance, which in turn permits the damage of frivolous curricula.

The story starts with the promise that the college experience represents both the ultimate entitlement and the ultimate investment. The Census Bureau reports that high-school students don't work summers now as they used to: Only a third take paid summer employment, compared with about a half up until 1990. Their absence in the workplace comes in part because they have been told it's a better idea to attend summer school. Applying to college continues the trend of dependence: The application is not so much about earning or offering as it is about taking, including taking on debt. Each college guidance department is an exquisitely tuned machine designed to extract bounty in subsidy or loans for kids, whether from parents, the federal government, or schools. Whole sectors of the consulting and social-work fields are now dedicated to helping students and their parents squeeze out any remaining portions that guidance counselors fail to deliver.

Whatever a family's income, its actual experience of financing college hardly varies. Every hair on the candidate's head is tended. Poor and middle-class teens learn that "nobody" pays the sticker price of tuition. Loans and sports scholarships will help those who have no financial disadvantage. Children of the wealthy receive bonus funding so that they may join the right sorority. They get extra cash so they can live in off-campus housing with a cleaner pool; they get cars, parking permits, and backpacks. Once they're settled at school, the tending continues. Universities and colleges, whether they serve rich or poor, emphasize that they will give their charges "personal attention": Kids will not only consume education at college but also do so under perpetual, costly, supervision. Their faulty course selection represents the reasonable response to the message they get. Why not Women's Studies, a girl asks, since college is all about me?

Of course, most of us tell ourselves that this investment will indeed pay off grandly. Our Program is more than a scholarship. It's an opportunity to change your life! reads the motto of a Bill Gates full-ride Millennium Scholarship for minorities. This can be true. It holds true, for instance, for some rising college seniors who have training as mining engineers. But often, even for engineers, the payoff is not there, in part because kids have already become too tame: Lamb in, mutton out. The donors, or the parents, think they are delivering prize resources, intellectual capital, to worthy recipients. Worthy receptacles is often more like it.

The whole process yields the tragedy of the post-graduation commons. Those who passed through college funded by others emerge displaying bravado, but inwardly doubting their own competence. The grass on the campus lawn was sweet, but what now? Those who took on debt find it heavier than they imagined — currently averaging $33,000 per graduate, a record. These loans are like saddles placed on the backs of surprised humanists who ill understood what they were getting into. So of course is the greater burden, finally coming into view for them, of our debt as a nation, a debt they will each shoulder in taxes when we are all gone. The shock is especially sharp during recessions that few universities predicted. Postponing entry into the work force by taking on yet larger loans to go to graduate school does not always work out either. The old alchemy of law school no longer works its financial magic: Fresh lawyers are simply undergraduates with extra debt. Ditto for many other professional and academic programs. "That Ph.D. Now Comes with Food Stamps," read a Chronicle of Higher Education headlin e in 2012.

The cause is our nation's general infatuation with managing every aspect of young lives, of prolonging childhood deep into the twenties. This infatuation comes, in turn, out of the arrogant assumption that we know what is financially best for the next in line. College as we know it is after all our system, not theirs. The economy as we know it may not be the economy young people experience. Example: We, as a society, have settled into a faith that interest rates can never rise. That's our privilege, but it's wrong to force the belief upon twentysomethings. For it is they and not we who will deal with the consequences if we are wrong.

Young people need to experience independence. They should live in an environment where they can plan their future themselves, starting at age twelve, 14, or 16 — not 22. Far earlier than we think, youth need to make their own choices and take risks, and, yes, they need to fail sometimes. That means real risks, not the controlled experiment of summer camp, or Outward Bound. Learning to be financially responsible is a messy process, but it has advantages.

One parent who understood this was the entrepreneur Alfred Lee Loomis, who worked in utilities back in the 1920s. When Loomis cashed out of his company, Bonbright, just before the 1929 crash, he distributed a share of the proceeds to his three sons, each receiving approximately $1 million. The youngest, Henry, was 14. "I remember that his cronies were aghast," Henry Loomis recalls in Tuxedo Park, Jennet Conant's biography of the remarkable Alfred. Concluded Henry: "Father said we would make mistakes inevitably, but he'd rather have us make mistakes with the sums we'd be playing around with as boys than the ones we might make if we had to wait until his death to get the money, when we were 30 or 40 years old."

Loomis, the father, took the independence principle to an extreme. But without going to his length, we can still alter our policy environment to allow more independence. Herewith a first pass at four recommendations.

First, remove the constraints on paid high-school employment. State and federal regulations often hinder teen employment. If we loosen the minimum-wage rules, or the child-protection rules, more employers will find that they can take on youth workers. Those who'd rather attend summer school may do so, but we shouldn't always promise them that school will be worthwhile. Experiencing work early changes people for the better. So does working while in college.

Second, let universities adopt the rule that every undergraduate must work ten hours a week every term. Parents should not deceive themselves: Programs to teach independence are not the same as true financial responsibility. It might benefit them to insist that children manage some business or responsibility of the family's.

Third, the hardest change: Reduce subsidies for college. Let the sticker price be the true price. Do this by withdrawing federal funding so that colleges have to compete when it comes to prices. If that means students can afford only three years at school, not four, so be it. The goal is to make it possible for young people to pay more of their own way through college. Let some young people make the big investment that, say, medical school, entails; but let them make it for themselves and not because their grandparents thought the numbers would work out.

A final change can also transform: Give young people a chance to count and control their own resources. A modest version of the old Loomis idea is the child savings account, available to infants at birth. Give youth the tax advantages of a 401(k) that starts while they are learning algebra, rather than when they are having their second child. Such accounts would allow children to invest not merely in the banks but also in stocks and bonds, or at least mutual funds, deriving better retur ns than the pitiful interest available in a bank savings account. Allow all young people, rich or poor, the chance to own such accounts. Optimally, young adults would have access to their money before they need bifocals. The idea of child savings accounts could actually be realized within a semester or a session or two of Congress, because Democratic senators such as Ron Wyden and Chuck Schumer have joined Republicans in supporting the child-savings concept, though not always for the same reasons as Republicans. Tack onto the savings accounts for children another kind of account, the universal savings account — a proposal that Chris Edwards of Cato and I have written about in the Wall Street Journal. The USAs would allow adults to withdraw cash from IRAs not just at retirement but also when they want to invest in, say, their own new company. After all, college grads are not the only ones infantilized by our current culture.

Reviewing such proposals, parents will no doubt, à la Loomis, draw in their breath to protest: Independence is dangerous! This will be wasteful! The youth will crash and burn!

Yes, some will. But some won't: Henry Loomis, the storied 14-year-old, pursued a remarkable career, first in in the Navy, then in science, and finally as director of the Voice of America in the heat of the Cold War. And, after all, the current process is certainly wasteful and based on our own fallacious, wasteful premises. Those who sustain the current education-financing system certainly have already wasted plenty of resources, both public and private.

Focusing on true financial independence for young adults is a useful criterion for sorting through the great range of education reforms currently under discussion. Reforms in funding style can even obviate the numerous other education challenges we face. Academic frivolity will recede of its own accord when a new figure enters the scene: the active undergraduate who controls his own situation. Students who think they need jobs, and who have an idea of real markets and prices, will begin to demand more classes that prepare for those jobs. Against any loss that results from lower college subsidies we have to weigh the ability the next generation will display when it gains freedom appropriate to its years. Such ability is in any case necessary, so that these youth can take care of themselves — and, soon enough, the rest of us.

— Amity Shlaes is the author of four national bestsellers: Coolidge, The Forgotten Man, The Forgotten Man (Graphic), and The Greedy Hand.