Isn't it to either do that now, or to lose the signaling value of college degrees as indicating knowledge.
I'm not sure knowledge is what a college degree signals to prospective employers. The alternative hypothesis, which AFAIK has a fair bit of support, is that it signals a willingness to do whatever it takes to fulfill a set of on paper requirements imposed by an institution, by hook or by crook.
If actually learning is valuable to them, independent of whether it will actually help them with prospective employers, then yes. But I don't think we can assume that all students value that.
For professional engineers, at least, the degree is not what tells you whether they have learned the fundamentals. The license is.
Even for engineers in domains where there is no licensing (such as software, for example), I would expect them to have learned the fundamentals on the job, not in college. I think most employers expect the same; they don't view the college degree as a signal that the prospective employee knows the fundamentals, they expect them to learn that on the job. What the degree signals to the employer is that the prospective employee will comply with their corporate process.
While this is true, I’ll take the engineer who studied diligently with an aim to learn the material over the one who was just in it for the credential. I don’t agree with your implication that you will learn the fundamentals equally well on the job. It certainly happens, but from what I’ve seen it’s usually people who never had the opportunity to learn in school who are aware of their gaps and seek to fill them in. The nonchalant attitude towards theory tends to persist in the workplace.
The former engineer will learn on the job just as well. The latter one won't learn well in either environment.
You appear to believe that the crucial factor is the person's attitude towards learning, and I agree with that. I just don't agree that a person with that attitude towards learning is necessarily any better off going through college instead of getting a job and learning there. Particularly now, with so much good material available for free online, someone who wants to learn can do it without spending anything more than the cost of Internet access. So the opportunity to learn through college is even less beneficial for those who really want to learn than it was in the past. It might be enough of a benefit to justify college for some, but I think that number is much less than the number who actually go to college.
From the employer's perspective, if you think you can evaluate someone's attitude towards learning well enough, I don't see why their having a college degree would matter much one way or the other. If you think they have the right attitude towards learning, hire them! Whatever they don't know yet, they'll learn.