"but when you go to collage for an STEM major there is a huge amount of critical thinking and problem solving involved"
I went to college for Computer Science and while there was definitely a larger emphasis on critical thinking and problem solving than in high school and grade school, testing (which is the closest to a school equivalent of a job interview) still ultimately boiled down to you either knew the material or you didn't. Testing was virtually never a conversational process during which I could ask the test-giver questions to get at a deeper problem, so ultimately very different than these problems where the "tester" (interviewer) doesn't actually expect you to solve them during the "test" (interview).
My comment has nothing to do with the experience of LEARNING in USA schools, but rather TESTING in USA schools (including the vast majority of colleges).
FWIW, as an older experienced software developer, I now excel at the sorts of interviews you are describing, but when I was younger and just out of school I was terrible at them. Not because I was a bad developer/engineer then, but because of anxiety brought about by being asked about things outside of my element, because I just wasn't used to that having never been exposed to it. Based on lots of conversations with other developers, I don't believe I am alone in having this difficult adjustment period with software interviews when first starting out as a professional.
It is entirely possible your process works fine for you because it is one of those ones that is unlikely to produce false positives, which is what you really want to avoid, but I'm sure there are also some great developers just out of school that totally bomb your interviews while they would do great at the actual job.
If you can hire enough developers to allow those false negatives to exist, then that's no skin off your back but your anecdote about having to lower standards suggests that maybe passing on some of those false negatives was detrimental at least in the short term.