Screening for college admissions made sense a century ago, when 5% of people went to college. Today, not so much. From an undergrad class perspective, the difference between MIT and a better state school is mostly the brand stamp and the admissions department.
Why do we want to stamp people with a stamp like "MIT"?
If nothing else, the branding is reflective of how the world at large works, I guess.
And reading between the lines, it sounds like MIT has another "lost class" or two. A few years after I was admitted to MIT, the Director of Admissions retired and was replaced by a professional in the field. And being a professional he followed the faculty's official findings on how to select applicants and all of a sudden MIT was getting calls from schools asking why their best students were no longer getting accepted while the next tier suddenly were. And rather quickly the physics faculty led a revolt because way too many of their students were having too much difficulty with the above above minimum core requirements.
I got to casually know one of these students, she was very nice and of course smart, but boy did she struggle with the required math based core curricula of her major unlike her female peers from my years and thereabouts.
Harvard's an easy one. Rich and powerful people look smart by association with smart people. Smart people gain access to powerful social networks.
My question was why this was a good idea for society. MIT was funded through federal grants, financial aid, and philanthropic donations. It's a 501(c)3. If it's bad for the world, we ought to have some mechanism to fix it.
We don't, and that's a deeper discussion about how we want to organize society. We ought to. In the limit case of a self-perpetuating endowment harming the world, there ought to be some way for that to be repurposed to help the world.
And I don't think there's much of a solution to the conundrum of "rich people donate to the rich places and attract more rich people". In all the various other ways billionaires avoid taxes and donate to shady organizations/"charities", it's hard to really knock on them giving money to a place where (in SOME capacity) individuals past their immediate community benefit. It can certainly be better utilized, but I don't have a big fuss with it in the grand scheme of things.
Financial aid is certainly a bubble soon to burst, but that's an issue that expands nationwide, not just in the elite schools.