There are several interesting things going on here.
(1) The UCs were long known for their high standards, in particular UC Berkeley and UCLA as their flagships: in general, if you hired one of their graduates (especially an in-state student), you were getting a smart and ambitious employee. This contract is now broken. The signal doesn't work anymore.
When the world updates for this fact, things get worse for them: out-of-state students will be less likely to want to pay the tuition, employers will be more skeptical, and they will have a harder time getting the best talent. This is a negative feedback loop.
It's weird that this happened because organizations are usually much more self-preserving. Universities live and die by their reputations. Perhaps they thought that dropping the SAT and (this is the subtext) admitting students quasi-randomly would gain them political brownie points, but to what end? Looking back: what was the point of all this?
(2) The SAT was the final load-bearing beam in this entire system. High school grades used to mean something, but grade inflation has wiped this out. Application essays? A whole industry of ghostwriters and now AI has winnowed the signal to zero. Teacher recommendations? When they matter so disproportionately much, they'll be bought and paid for. (The failure pattern is the same: much like how the universities have sacrificed their long-term credibility for short-term gain, I'd wager that many schools and teachers have done the same.)
Parents used to defer to teachers and schools as experts, but the competitive environment has made parents become forcefully involved -- threatening, cajoling, bribing to get their students ahead. Schools never had the resources to defend themselves against this.
Many people -- especially those below the SAT median -- probably thought that they would be better-off in a world of no tests, that they'd be able to get some relative advantage. Nobody would know they're in the 30th percentile, and maybe they could sneak by and pass for 80th. That may have been so in the short term, but the price is becoming clear now: the whole system is broken. (This is frequently the case when people try to turn fair games into rigged or opaque ones: the people who think they're going to win because of their new advantage tend not to see the whole picture, and will overestimate their expected position in the new world.)
Maybe you were an activist parent and managed to help force the UCs to get rid of standardized testing. And maybe your low-test kid got admitted to Berkeley. And maybe they even graduated with a 4.0. But you can't keep stacking the Ponzi scheme forever, eventually you get the reality test: they can't get a job and now you're stuck holding the bag on the student debt. A pointless waste.
