Overnight, colleges would stop offering majors that did not lead to paying jobs (unless the student paid cash in advance), and stop accepting unqualified students.
Good idea, it would certainly cull the ones who don't belong.
It would shift scholarship money away from deserving students to cover their liability, though. Most of the smaller, private colleges do this. If they didn't, no middle class kid could begin to afford to attend. It's these smaller, less prestigious schools that are serving the most talented and capable of students, the "Name brand" schools are shunning these kids in order to fill quotas. Remember the day when Rutgers University was considered Ivy league?
My daughter is in school on such an arrangement, and what we pay is within reason-- on the scale of what it cost kids to attend before the inflation bubble.
Eventually schools will close. Somebody might get a clue and establish a "bare bones" college, one that concentrates on a general core curriculum. Students would have a limited range of majors, concentrated on general disciplines: math, English, languages, history etc. Facilities would be limited to classrooms and small lecture halls; no stadiums, arenas, research facilities, architectural monuments, football teams, etc. Finding competent faculty would be easy enough.
Imagine if 90% of tuition was devoted to teaching instead of the usual ancillary crap. Costs would be within the reach of any motivated student.