It is far worse than that.
Universities have a lot of metrics that they are judged against that don’t lead to a quality education. Research doesn’t lead to good undergraduate students. A good pass rate just means the curriculum is soft enough to keep don’t students from failing.
So you have university presidents who are incentivized to increase prestige and they aren’t going to focus on the quality of education because that doesn’t lead to better metrics. If presidents try to defend their universities’ way of teaching, they get replaced by those who follow the system.