Thousand of applicants are admitted to the most prestigious U.S. colleges each year, of course, but many of those schools have hardly increased their class sizes in decades, so as the U.S. population grows, the number of people who could do the work but cannot be admitted also grows.
This is true, and as a result, a growing number of schools have increased the quality of their student body, rankings, and selectivity. Even 10 years ago, a place like Georgia Tech was considered a backup for people that couldn't get into more selective schools. Now it is one of the most selective tech schools around, and its graduates have fantastic job prospects.
I also want to comment on the part of "could do the work" at places like Harvard and Yale (my nephew attended Yale). It is shockingly easy to graduate from these two places if someone wants to take easy classes. The hard part is getting in, not getting out.
To illustrate how easy Harvard can be, an Economics major at Harvard only needs to take a single introductory calculus class (Math 1a). My son helped his roommates with that class, and he considers it easier than high school AP Calculus BC. Econ majors could push themselves further if they wanted to, both in terms of more math courses or more difficult math courses, but there is no requirement at all to do so.
In contrast, UChicago expects its Econ majors to be comfortable with multivariable calculus and linear algebra to be able to pass their Econ courses. And we hear that Princeton, Columbia, and Cornell also have rigorous education requirements.
I could write pages and pages about why Harvard makes it so easy to graduate, but in summary I think that the admissions office selects students who they believe will make a significant future impact, and further believes that for perhaps most of them, it won't be due to academics. Think of someone like David Hogg, who is currently a sophomore at Harvard.
And after you take into account special cases like David Hogg, and all the institutional goals that Harvard has with regards to admitting ALDC (Athletes, Legacy, big Donors, and Children of Faculty) and URM (Under represented minority), I estimate that no more than 30% of Harvard's class is admitted due to pure merit. This means that there are a lot of academically talented students that go elsewhere.
I am not defending this practice (as I said, I could write about this at length), but just explaining it. Many other selective colleges have a similar approach.
