I 100% believe this is true. When I was in college it was pretty staggering to see my fellow classmates receive passing grades and get shoveled through the programs despite never grasping the basic fundamentals of CS. These were people who, at the end of CS 101, still couldn't tell you the difference between a string and an int, who after CS 202 _still_ couldn't tell you the difference between a string and an int, and so on and so on. Yet happily through the system they continued.
I eventually became part of the lowly drop-out club (I found attending college later in life to be a maddening experience of pointless busy work, rather than a challenging mind-expanding one). However, those people who fumbled around randomly swapping out types until things compile are now CS degree holders.
It seems true even for the higher tier degrees too. It seems even a masters degree isn't a good indicator. In the past year alone I've watched several guys with masters enter and then promptly leave our startup due to having just absolutely no idea how to write software. :(