Universities are a business: They want to serve as many customers as possible. To deny someone admission due to poor academics is to deprive the university of revenue.

Similarly if a student were to be an unsatisfied customer (due to low grades), and take their business elsewhere (take a semester off, then transfer elsewhere), it would also deprive the university of revenue.

Far too many students don't come anymore for specific classes, teachers, or degrees. They want the experience, to check a box for their parents and future employers.

Having taught at a univerisity, I experienced much of this first-hand, including the experience of having students grade teachers, and their dissatisfaction with their grades influencing whether a university asked an adjunct professor to return the following semester. Grade inflation is real.