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I think you missed the point. Part of the value of the college is the connections with these people.

So then it's even better if they end up in other schools right?

More exposure to less connected people who can derive value from knowing the child of someone who accomplished something.

And students who get into the highly competitive schools where this matters most get by on nothing but a top-tier education?

Seems like everyone wins honestly.

I think a better way to phrase what you're thinking is the social mobilizing utility/effect of college depends on making these connections.