Why they're worthless now: everyone has them, and they're easy or at least predictable enough that they have little predictive value.
Nope. There is an assumption in your statement -- that all college degrees are created equal.
There is a reason certain schools and certain programs are given preferential treatment. You see, in statistics, there are two types of errors -- Type I and Type II.
Imagine a candidate applies to a top school -- pretty much all highly ranked schools and programs would err on the side of Type II. That is, they would rather reject a good candidate than admit a potentially bad candidate. That is not to say it does not happen, just that that is what they try to do.
The reason MIT or Harvard are prestigious is because of this. As an employer, you can use these schools as a filter. It is not that you learn something extraordinary at MIT's engineering department that you wouldn't at, say, Rutgers. But the point is, MIT has a high enough standard for both admission and graduation that you know someone who graduated from MIT is a rock star. The same goes for business schools, law schools, medical schools and so on.
The only exceptions are doctoral programs -- why? Because PhDs have other factors at play, including your area of research and your thesis advisor.