i dont know what trauma you went through at iowa state university's calc 3 hazing but I personally pulled the patrician move and graduated with a degree in history, only to get a job programming straight away anyway.
leetcode, system design, and book knowledge questions about java will forever be more manageable than a compilers class or multivariable calculus, for purposes of making enough money to live a middle class life without burning out
Universities like to keep their graduation rates high to ensure competition at the front of the pipeline. Also, by keeping admission so competitive you basically ensure that whoever does end up getting in has the capacity to do well at any program (though statistics are still gamed - for example it is almost impossible to "drop out" of MIT - you are just placed on indefinite leave if you express that desire. That way their graduation rate very high since the people on indefinite leave don't factor into it).
A lot of folks I went to college with did nothing but party, drink, hang out. Education didn't matter to them at all. They were going to get a job at their family's firm, company, etc anyway. Didn't matter what their grades were.
Professors know who they can't fail.
The people marking the exams did not know whose exams they were marking.
It's possible that corrupt professors worked around this, but there was never any scandals related to this policy.