Could this start a negative cycle where college degrees are devalued because of the quality of graduates, reducing the demand for degrees, leading to colleges lowering standards, causing lower quality graduates, leading to further degree devaluation?
Absolutely. But this process started years ago. The average IQ of college graduates is now only 102 and the acceptance rate is ~80%.
Luckily, with the current supreme court, there is a high likelihood of overturning Griggs v Duke Power Company. This would allow employers to just IQ test their applicants rather than relying college as an IQ proxy.