While I do think that higher education needs an overhaul, the larger problem is that HE is too often misunderstood. It's not a place where you learn skills that explicitly help you get a job; that's called vocational training, and a whole bunch of places do that extremely well. Hell, if all you're looking to do is work, you probably don't need college at all. Zoho's been hiring kid straight out of high school, with no discernible difference in productivity with their college educated counterparts (http://blogs.zoho.com/general/how-we-recruit-on-formal-crede...).
HE is a place where you go to interact with people and ideas fundamentally different from what you know, receive mentoring on how to consider such ideas, and how to create those ideas on your own. It does not claim to make you a smarter individual, and its value is largely dependent on your own drive to make the experience a success. In essence, it is exactly the same as YCombinator - even in the obfuscated and oft frustrating admissions processes, which is what I believe the article refers to.
What you are describing is a finishing school for the rich, which is what higher education used to be, a long time ago. That is no longer true.
If you want a white collar job in the US, you must go to college. Yes, there are some outliers, but having a degree is damn close to a hard requirement.
Pretending that is no longer true and indulging the liberal arts fantasy just makes the problem worse. There are too many kids who come out of college with debt and a degree in not having people take them seriously.
Turning universities completely into vocational schools seems like it'd have a number of downsides though. The idea that students should be well-rounded and that it's good for society for educated people to have some basic core knowledge isn't only a "liberal arts fantasy", but also a "science fantasy". If you're training people strictly vocationally, not only humanities cores, but also science cores should go, or at least both should be greatly cut down to only those students who specifically need a particular class for their future careers (e.g. maybe CE students will still take intro physics as a prereq for semiconductor physics, but CS students would no longer take Physics 101, or Bio 101, or Chem 101, or any math classes not strictly needed for their CS training, etc.). If you wanted to be really hardcore about it, you could even assess classes based on their predictive earnings power, so if Physics 101 doesn't produce measurable gains in its graduates' earning power within 10 years, axe it.
I think there's truth in both these points. That is, some of the vast difference in unemployment between college graduates and those without right now is just due to hiring managers (who are largely college graduates) being more comfortable with the sort of person who has gone to college. Part is due to the more advanced skills required in the modern American economy.
Regardless, this bad recession has dramatically underscored the value of college experience as an important thing for someone who places even a mild value on lifestyle security. Or to put it another way, it is a huge risk to bet that in the future, college experience will stop being seen as important. You might be right. But if you aren't, and you experience misfortune, your expectations are going to be much better with a college degree to wave around than without.
I don't disagree with you; in fact, it's the hiring manager's misunderstanding as much as the prospective student's.
The Bachelors is required simply because it's an easy screening mechanism; the colleges have already whittled the list down to a more manageable size for the manager to go through. It used to mean that a person had an interest in learning beyond what was required, which was nice for jobs. Now it's just that their parents/friends/teachers have told them to go.
Really I'm saying simply that people are expecting and demanding the wrong things out of a liberal arts (traditional definition) degree. Most of the time what they'd really want is a vocational degree, or at least something more similar to what the English do with law school, where you enter directly out of high school.