I'm a university academic who teaches on a Masters course, and I find Mannatan's perspective bizarre, and quite frankly insulting to academics who put a great deal of time and effort into trying to deliver high-quality tertiary education.
University students do not "work for free for three years". For starters, the academic work students do is not for the benefit of the university (what on earth would we do with it?), but for the benefit of the students' own education. Why is it a scam to expect students to put effort into obtaining their educational qualifications? What is the alternative - that students are paid to do their uni coursework? As for "a higher standard of degree is likely to open more doors to further education or employment", this shouldn't really be news to anyone. No-one - or at least, no-one who actually works with university students or graduates - tells students that they will fail at life unless they get a first or a distinction. Is the focus of a university on making money? To a certain extent, because universities need to make enough money to employ staff, run courses and maintain their facilities. But the real focus of universities is in delivering a standard of education that produces excellent graduates, so that they build up a strong reputation and can attract a high calibre of future applicants.
@IndianaJones2021, if it's any help, I can explain a little about the marking processes that will have been conducted in order to reach your DS's final degree award. The marks for each of his individual modules will have been finalised by the module's coordinator/convener. Assessment marks are rarely agreed by a single individual - joint marking, or a process of first marking and then moderation (checking) by a second marker, are the norm. Each module will have an assigned external examiner who is an academic from a similar discipline who is based at a different university (and therefore independent), who scrutinises the module marks to make sure that the marking process has been consistently and fairly applied.
At the end of the year/course, the Exam Board sits and reviews all the module marks for each student. At my university, we meet online and work through a big spreadsheet that has every student's marks for each module. All the marks are anonymised so that we have no idea which individual student's marks we are considering - this is to prevent any bias (positive or negative). My course has a set of criteria for dealing with students whose overall average course mark falls within a certain range below a grade boundary. For example, students who are just below the distinction grade boundary are "moved up" to a distinction if a) their grade is within a certain distance of the grade boundary, b) they have achieved a distinction in a certain proportion of their modules, and c) they have also achieved a distinction in their dissertation. At our Exam Board meetings, there is a member of the Faculty present as the university's representative, and their job is to see that the Exam Board is applying the rules of degree awarding correctly. The external examiners for each module are also present.
It is very common for one or two of our students each year to miss out on a distinction by the narrowest of margins, which is understandably incredibly disappointing. I hope the explanation above shows how much effort university staff put into making sure that the marking processes are fair and consistent, and the rules of degree awarding are applied without prejudice - even when we heartily wish we could bump a grade up in the case of a very near miss!
I can completely understand your DS's disappointment in getting so close to a distinction, but a high merit is still a very impressive achievement. I think the suggestion you've already had from others that he should put his overall grade on his CV when making PhD applications is very good advice.