I don’t see universities turning away hopefuls by the dozen. Far from it.
Now that fees are higher, universities need to get numbers up, and are (IME) less rigorous than before with admission requirements.
Not only that, fees (and the lack of respect for experts that Michael Gove has encouraged) have changed the dynamics between staff and students immeasurably. Many students think they have effectively bought a degree, and put a lot of pressure on staff to give high marks. Staff, meanwhile, are run into the ground, and are judged on student satisfaction surveys.
People can have decades of experience swept aside by eighteen year olds who don’t yet understand the value of what they are being taught, as they haven’t had to put their learning into practice. If they aren’t being entertained (as opposed to educated) many will give a poor satisfaction score.
The tide is turning now, but until very recently, the number of ‘good degrees’ achieved by students on a course was also a measure of its success (and failure can easily lead to courses being closed).
Consequently, first class degrees are now awarded to as many as one in three students (and this is in Russell Group institutions as well as post-1992 ones).
Standards falling? I would say that they are at that level. I can’t be sure; but I suspect that literacy levels are much higher these days than in the past, though. We understand Dyslexia now, and there are more opportunities for children to read, whether on screens or in books.
I am a member of a couple of local history groups on Facebook, and the grammar, spelling and sentence structure of many older members is dreadful. They are usually the ones who complain about younger generations because ‘Us lot would of gotten the cane for bad grammer, not like them kids now.’
People then often left school at 14 or 15, and had jobs that didn’t require literacy, so it wouldn’t have been as obvious then as now; but I really think that literacy standards of the general population (as opposed to the better off) were a lot worse in the ‘good old days’.