Take a look at the sentence again:
Clyde knew that he should be saving money for next semester's
tuition he spent every paycheck, however,
on gold jewelry and expensive dinners for his greedy girlfriend Gloria.
The problem occurs between tuition and he. Clyde knew that he should be saving money for next semester's tuition is a complete sentence. He spent every paycheck, however, on gold jewelry ... begins the next complete sentence. Because these two parts have only blank space between them, they make a fused sentence, a major error.
To fix the problem, you could put a semicolon between tuition and he.