I suppose it's hard to tell whether it's a systematic failure of the school or if the students lack motivation; I know I did my first time attempt at university. There's another post from Jeff Atwood [1] that highlights a paper that suggests that - in first year programming courses anyhow - students may not have the ability to even learn how to program. Personally I think that the major factor to these students not developing good skills, or in the case of the paper now learning how to program, is a lack of motivation. It's anecdotal at best, but I had one professor do almost everything to help our class do its best and the bell curve for grades was not all that off the average. He would repeat over and over problems and concepts which would be tested on both of our midterms and our final, things like "Prove the binomial theorem two ways". We were allowed a cheat sheet on one of our midterms which we could put anything on (including the proof of the binomial theorem given from our textbook). Even on our final, he said that if we aced it and had done all of our assignments, we would get an A. Still, people failed and/or dropped.

[1] http://www.codinghorror.com/blog/2006/07/separating-programm...