You're wrong in your claim that the majority of college graduates are not functionally literate.
2% of college graduates fall below a basic level of literacy.
14% of total adults fall below basic on prose; 12% on document; 22% on quantitative. The numbers of college graduates are vastly lower than those.
And further, digging into the data, I'd be willing to bet that half of those numbers of people that struggle on basic literacy - in english - do so because their primary language is either not english and or they have very little command of the language (first generation immigrants etc).
It is certainly interesting that the "National Assessment of Adult Literacy" report indicates that only 13% of adults can perform that sample task of "computing and comparing the cost per ounce of food items".
Same for comparing and contrasting two newspaper articles, which is probably even more relevant -- if you can't do that, then you're immediately disqualified from pretty much every profession that pays a living wage. And that's not even a very high bar, considering that newspapers are written at what's supposed to be a 6th - 8th grade reading level.
Sure, the bar of 'fully understanding' is ridiculous. People don't have 100% accuracy with anything. Most people would also fail the same measure if the document was spoken vs written so despite the name it has little to do with literacy.
Note: The bar for functional literacy includes banking paperwork which is intentionally designed to be confusing. If more people understood it they would rewrite it to be less clear. Also, your failure to understand what you linked precludes you from the ranks of 'functional literacy'.
PS: While high, you might reasonably interpret at least intermediate as an acceptable level for college graduates and that's well over 80%.
Talk about fraud. The site mentions "proficient" in quotes trying to make that sound like a low level of performance when in fact it is the highest rating on the assessment (2 spots higher than "Basic")!
I'm guessing the rest of your bullet points are a stretch as well (at least they seem like stretches and now we know you cite bogus sources).