As a teaching assistant and graduate student, I see it all the time: students who are in college that have no business being there. I'm teaching a remedial mathematics course this summer, and let me tell you, the students they put into these classes can't even add fractions. It's awful.
But does that reflect badly on the education system, or university admissions standards? I think it's a bit of both, but mainly the latter. In the day where the college degree is all but a requirement to even get a job working retail (a bit of an exaggeration, but it seems like it), of course college admissions standard would have to go down. But what if the causation is the converse of this? I think it is.
The school I teach at and attend graduate school at only has about a 20% graduation rate for undergraduates. Unfortunately, this is not the only one, and is actually quite commonplace. Why? It's because most colleges now let just about anyone with a high school diploma or equivalent in. This is setting a vast majority of students up for failure.
The truth of the matter is that most college graduates get jobs that have absolutely nothing to do with their degrees, and someone with just a high school education would be able to perform with the same level of competence as a college-educated individual.
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Along with admissions standards being in the tank, so is the typical undergraduate curriculum. It's nowhere near as rigorous as it was about 30 years ago. Of course, you let people in who have no business being in college, the rigor level is going to necessarily have to go down. It's a vicious cycle.
In theory, I'd estimate that only about the top third of high school graduates have any business in college, and admissions should be restricted to this demographic. If this were to happen, the college degree would once again be considered an asset rather than a requirement. Non-college educated individuals would have better chances at securing good jobs. Undergraduate curriculum could come back up to its former rigor level, one where students really did get their money's worth. Furthermore, technical and vocational training would be a much more appealing option to a larger demographic, and students in these programs actually use what they learn in their job.
All in all, college isn't what it used to be. Just anyone can get into college these days, and it's caused a whole lot of problems that will only be fixed if we make college admissions standards much more rigorous.