In reality, holding a piece of paper has nothing in common with relevant ability. Some graduates will exit university as competent people, some won't.
This isn't exactly news, or even a recent phenomenon. My peers who finished their CS degree circa 2004 ish were a broad mix of utter idiots who shouldn't get a job in that field, or damn sharp (if green) technically-minded people, or somewhere in between.
The industry will sort them out; the ones that can, do, the ones that can't, will do something else of use, or find another job.
