Let’s address the OP with data. College attendance is on the rise and has been since the 1980s (there was actually a period in the 1970s when enrollments dropped). As others have noted, many more students have the opportunity and ability to attend college nowadays - open enrollment institutions like CCs and for-profits are readily available, and especially for the latter, schools aggressive help students apply and receive aid.
We still see a gap in college access among students of color and low-income students, and ironically the systemic solutions to address these gaps - affirmative action and need-based aid - are on the decline. Middle-class parents are the bulk of voting constituents in most states, so you see the advent of merit programs like in Georgia, which have been demonstrated to increase access for middle- and upper-class students but have no effect on working-class and poor student enrollments.
What’s probably happening is what happened with high school diplomas in the 1950s. Since that time HS completion has been noted as the gateway to a comfortable middle-class existence. With a diploma, one could be expected to do fairly well economically. The college diploma is becoming the middle-class credential today, with the loss of manufacturing jobs since the 1970s in the US.
Selective colleges are competitive, probably more competitive than ever, witnessed in increasing SAT scores, higher GPAs, etc. of each successive entering class. Non-selective schools have the opposite issue. With more and more students opting for higher education out of necessity, many students who are less academically inclined are there to earn a certificate or a degree by doing the bare minimum. They’re not inclined to apply for grad school or aim for the dean’s list. Mix in the phenomenon of “helicopter parenting,” those parents who micromanage their children’s lives and prevent them from taking on progressive responsibilities, and I can see why the OP’s wife is bemoaning the motivation and intelligence of the students in her classes.
I should note that as a TA for graduate students at an elite school, we see some irresponsible students and poor work as well. Not much, but I’ve had papers that appear to have been written by semi-literate middle schoolers, and I’ve had students who show up before a final exam bemoaning their low grades, when they never came and talked about it during the semester. Again, not often at all, but it does happen, even on the grad level at elite schools.
Another complication is the fact that most states don’t have strong linkages along the P-16 continuum. Most states (now have to because of NCLB) take their lead on education from the Dept. of Ed and not their own state higher ed coordinating boards. So college entry requirements often don’t match what students need to know to graduate high school. There is a need for educational leaders on all levels to coordinate their efforts so they can better address the needs of the state citizenry.