I don't understand why it would be acceptable to submit generated code in the first place. I'd say it's functionally asking others to complete your assignment. Sampling code excessively and without attribution is plagiarism.

And seconding that concern about people not even learning how code works. This was an issue even before chatGPT, when people would by-default look up stack overflow snippets or existing algorithms instead of thinking and training their mind to be able to solve actual real problems, but now it's probably much more widespread as an easier way out. If the school is able to do a code exam in an offline environment, even with manual docs available, it should weed out the ones who didn't learn pretty quickly.