As prices for college go up, the student is more of a customer than anything, and therefore the pressure to raise grades goes up. Who is going to go to a college where people tend to need an extra year to graduate, when each year is 60k? Or one where only the top 5% of a class gets a top grade?

You are already seeing grade inflation in the UK too: Go look at the percentage of first class degrees over time.

The only place where a modern US university can be used as a filter is in their own admissions, where they can still be pretty stringent. Harvard could fill their class 6 times with people that are basically indistinguishable from their freshman class, so just getting into the right university already shows that you must have had some skill and maturity by the time you were a junior in high school.

This is also why hiring juniors is so difficult nowadays for software: Having successfully finished a CS degree at most universities says nothing about your ability to write any code at all, or analyze any complex situation. And with the advent of leetcode training, it's not as if you can now tell who happens to be good because they remember their algorithms and data structure classes really well. You have no idea of how good the new grad is going to be when they show to the interview, and even those that pass might not be all that great in practice, as they might just have spent 3 months memorizing interview questions like an automaton.