You know Sheila Bair as a critic of big banks during the financial crisis and a fierce defender of taxpayers. Now she's landed in the world of higher education, fighting for another underdog: the college student.

Formerly head of the FDIC, Bair is now president of Washington College and gave her inaugural speech Saturday. It focused on how to make college affordable for more families.

The bucolic, small liberal arts school in rural Maryland appears to be a far cry from D.C. politics and Wall Street, but Bair said she can draw some "disturbing parallels" between the "explosion of student debt" and the subprime mortgage crisis.

She doubts the problem will lead to another financial crisis. "But make no mistake, the trail we are on leads to tears," she said.

She called out several culprits for spiraling college costs and mounting student debt.

Federal aid programs are "poorly designed"

The government provides Pell grants and subsidized loans for students from low-income families, but Bair said the programs are abused, particularly by for-profit schools.

"Too many vulnerable, low-income kids have been recruited to for-profit institutions which are more interested in raking in their student loan benefits than providing them with a degree that has value in the job market," she said.

For-profit schools like Corinthian and the University of Phoenix have recently come under fire by federal regulators who say they use deceptive marketing tactics to recruit students.

The for-profit sector only accounts for about 13% of students, but 22% of student borrowers and nearly half of all defaults, Bair said.

"Spa dorms and luxury gyms" aren't the problem

Bair lists many reasons for why tuition has skyrocketed: cuts in state aid, easy student access to federally-backed loans, and poor financial management at some schools. The problems with building fancy new gyms and student centers, she said, are "overstated."

Biggest problem? Uneven economic recovery

Wages have declined while the importance of having a college degree has increased. This, Bair said, has sent tuition prices up, but revenues have actually declined for colleges as they offer deep discounts to more middle- and low-income families.

"Schools have responded by rapidly raising their tuition 'sticker price' hoping they can find enough upper income families to pay the higher amount so that they can subsidize deeper discounts for lower income students," she said.