I think the problem is the disconnect between learning vs passing. The goal of writing a book report is supposed to be to develop your brain and improve some skills. But society cannot simply give away knowledge without some kind of testing, so there must be an exam. And you have curricula where students are "required" to take a list of classes. Not all students are deeply excited every class on that list (or their teacher, or textbook) so some students are in some classes purely to tick a checkbox. That means to them, whatever skill is taught there is useless, so they'll happily use the LLM and cheat in other ways.

First part of the problem is we need to stop cookie cutter course lists. Forcing people to take a course they don't care about is a futile ability. Back in the day it was easy to do it, but now it has gotten harder due to LLMs and reliance on exams as a compliance tool. Yes, this will make it harder to say someone has a degree in X. Instead you will have to handle a bit more nuance and discuss what specific topics they studied.

Second part is we need to dial down the credentialism. Treating third party exam grades as an indicator of ability is no longer feasible in the LLM world. The only viable way is to have a extremely controlled exam environment, but that greatly restricts what sort of things you can examine. A lot of knowledge is relevant on a timescale of days or longer, not a few hours, and you can't detain people for days just for an exam grade.

Both of this are challenging for sure but I don't think it's impossible. The programming industry has dealt with this for decades. When someone has a degree in CS or related area, it doesn't mean all that much in practice, and the GPA in that degree is also a weak indicator. Instead, the industry found other ways to directly evaluate ability. Sure, they're not perfect, but not exactly hopeless I would say.