It spoke for the grading structure of the homework and did not apply to all courses.
Exams and projects were graded much more rigorously and there was a similar drop out/fail rate as you describe.
Not all engineering courses required homework for a grade. Often homework was only worth 5%, exams and projects the remainder. However, weekly problem sets easily consumed 10-15hrs per course, 3-4 courses per quarter.
Professors left it to the student to prove their understanding of coursework through exams. I often suspected due to the high rate of plagerism on homework (copying peers or access to solution guides).
Edit: don't get me wrong, I never had free time as a student. Every free moment outside of class was consumed by studying, working, eating or sleeping. I occasionally skipped lectures to buy free time.
It all came down to risk assessment which is a valuable skill to be learned for industry.
Time management I learned in school has paid off tremendously in my career and is something I seek more than a minimum GPA threshold in my interns and Jr. Eng's.