It's an oxymoron, but elegantly explained: “When you create a ‘meritocratic’ selection process where the production of merit is increasingly skewed by parental income, you end up with a hereditary meritocracy.” Sums up the situation pretty niceley. I can't speak for the US, but in Germany it's been this way for quite some time. The single most important factor in determining future achievements is the income of ones parents.
We start the "selection process" even earlier than in College. Kids after elementary school (at the age of ~10) go either to the Gymnasium (which gives you a university certification) or Realschule + Berufsschule (trade school). I know some elementary school teachers and hear horror stories of vindictive but resourceful parents suing schools, teachers and whole school-districts because their kids didn't get into a Gymnasium. This has lead to a situation where as much kids as possible get funneled to a Gymnasium, in order to avoid being sued by the parents.
Gymnasium education is being diluted so every idiot in the class can participate. And the young adults that achieve Abitur (Gym-degree) are utterly unprepared for any form of University-Level education, since self-organized learning and critical thinking skills are still somewhat important here. At the universities, the same game happens again, only it's a bit more complicated to influence positions there.