Aren't students already allowed to fail?

As a comment upthread said, let them cheat on the take home as much as they want to, they're still going to fail the exam.

Well, from what I understand, the answer is kinda "no".

Depends on the country and educational system I suppose, but I do believe professors in many places get in trouble for failing too many students. It's right there in the phrasing.

If most students pass and some fail, that's fine. Revenue comes in, graduates are produced, the university is happy.

If most students fail, revenue goes down, less students might sign up, less graduate, the university is unhappy.

It's a tragedy of the commons situation, because some professors will be happy to pass the majority of students regardless of merit. Then the professors that don't become the problem, there's something wrong with them.

Likewise, if most universities are easy and some are really hard, they might not attract students. The US has this whole prestige thing going on, that I haven't seen all that much in other countries.

So if the students overall get dumber because they grow up over relying on tools, the correction mechanism is not that they have to work harder once the exam approaches. It's that the exam gets easier.

> Aren't students already allowed to fail?

It's technically allowed on an individual basis, but the economics don't work for any institution to attempt to raise its bar.

If institutions X and Y grant credential Z, and X starts failing a third of its students, who would apply to go there?

For the most part degrees from roughly comparable schools in the same subject are fungible. However, graduating cheaters who should have flunked out of school their freshman year is a one-way ticket to having a reputation that your degree is worthless. You're now comparable to a lower tier of schools and suddenly Y's degree is worth a lot more than yours. The best way (not to only way) to combat this is to actively cull the bottom of your classes. Most schools already do this by kicking out people with low enough GPAs, academic probation, etc. My undergrad would expel you if you had a GPA below 1.8 after your first semester, and you were on academic probation if your GPA was > 1.8 and <=2.5.

This assumes, of course, an institution is actively trying to raise the academic bar of its student population. Most schools are emphatically not trying to do this and are focused more on just increasing enrollment, getting more tax dollars, and hiring more administrators.