Your view, accurately portrays the deeply problematic issue that is inherently intertwined with education - namely real life.
Human beings are not studying machines.
Fail a course, and the response is not "re-booting, preparing trial N+1", the response is usually discouragement.
With free courses, good material, always on, and self selected motivated students - MOOCs were supposed to change the way we studied.
They had % completion rates in the single digits.
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In every education system, there will be an issue.
The american system did very well - as long as there were jobs for high school students.
The fact is that most people are not cut out for college.
AS your (or any) society, starts forcing more and more people into higher education, because it becomes an unoffical pre-req for employment, you end up with many third order problems.
Firstly - testing.
In a class of 5 students, a teacher can test a students knowledge with detail.
With a class of 50 students, a teacher who has to grade submissions cannot afford the time to grade all of them.
This results in a drive for uniformity of answers - the removal of subjective answers from students, in favor of multiple choice.
The other way to enforce uniformity is to have a set of acceptable answers, so any deviation from it can just be identified and removed.
Since more students are now entering higher ed because its a pre-req for a job, they don't care about the subject. They care about the cert.
That means they will cheat, or memmorize the answers, and get on their merry way. Not everyone understand the humor in chemicals, or math. Nor do they care.
This is a process - and once started it grates at the old education system, till all of its higher purpose is eroded, and it streamlines itself to become a certification system. Buy your degree, or memmorize your way to do it.
This brings us to the next problem - not enough work even for degree holders.
The creation of more degree holders doesn't resolve the inherent jobs problem.
It just creates more supply, which drives certificate inflation, and wage stagnation.
Higher degrees are meant to indicate a level of mastery and capability on a topic. After a few cycles of degradataion, it just means that the end product is someone with the capability of passing an exam. Not necessarily that they can create new and novel works in their field.
And all the while, life goes on. These students are usually young human beings, who have varying levels of motivation, maturity and experience - they will go on holidays, take breaks, fail, succeed gloriously, do stupid things and so on.
TLDR: What you have described are epi-phenomena. The issue is jobs. The input cost of production from blue collar labor has been going down over years.
Unless there is meaningful work, for people who were never meant to be ... data scientists, or comp sci engineers - you will always have a problem.