To a certain extent, you are correct. However, companies like Jane Street need to filter and doing so based on colleges is the most efficient when other factors are all equal. Top tier colleges strive to base their admittance on performance and strive to be racially and culturally diverse. This gives Jane Street the ability to say they filter on the same criteria.

I'm all ears if you have a better system that is more efficient. I'd also add that I went to a State college and my resume would have been tossed if I applied as a starting engineer too.