"but the more they study, the proportionally less time they have to do other activities that make students 'well-rounded,' which is one of the qualities that top-tier universities value."

"Well rounded" is code for "like the WASPs we used to admit in years past." Look at the kinds of things colleges value: community service, sports, etc. These are the things that used to in years past set people of good breeding apart from the regular people who were too busy keeping a roof over their head.