Employers aren't hiring for what you've done, but for what they believe you can do. Sure, some "exclusive" firms only hire from Harvard, Yale, or Stanford, but the student has to ask himself/herself what the relative lifetime value associated with that path is.
I can't comment for engineering, as that's not my field, but I can speak to law and management consulting, two of the most identity-conscious fields out there, and ones in which I have direct experience. Alma mater is a sorting mechanism for first jobs. In both fields, the top firms only recruit at a short list of schools, and any other interviews are extended because of either personal connections or extraordinary outreach by the candidate. Beyond early career recruitment, that's it. And, as far as first-stage sorting, it's a porous filter. Quality seeks its own level and, after a year or two on the job, your actual workplace achievements speak more accurately to your potential than your university studies.
Frankly, for a position requiring more than 2-3 years out of school, I wouldn't hire someone still playing up their alma mater. Why? Because it means they haven't accomplished much of note since and don't have the growth mindset required to expand off that base.
Even assuming a student worked at a firm that wasn't top-ranked for the first year or two of his/her career, it's quite easy to transition to top-tier firms as a high performer. They want smart rainmakers. So what's the calculus? You take the "hit" for a maximum of two years on salary and the differential client opportunity set by going to a non-top-10 university, but forego potentially multi-six-figure university costs. For some this will matter greatly, for most it won't. On aggregate, I'd guess top-10 alma mater is NPV negative.
And let's also acknowledge the brutal culture associated with life at a lot of these firms. It's exhilarating, yes, and it can provide unparalleled opportunities, but it can also jade a young professional's self-concept and change his/her life path. (Don't believe me? Gladwell's 'David and Goliath' features a chapter on the big fish/small pond phenomenon of self-selection into careers. Even if you think Gladwell plays fast and loose with his data, it's eye-opening.)
Even assuming a candidate is successfully routed along a "high achieving" path, it's not necessarily suitable or healthy for that individual. I've seen too many cases of "brilliant star student burnout" to think it's an anomaly.
No, my approach with my own child will be to cultivate the core skills in his chosen field(s) that will afford him the flexibility to choose from a range of satisfying, competitive options without racking up a decade worth of debt. That might mean top-10, it might not. It depends on his interests, what funding options are offered, and the career path he's looking for. But I think the discussion can't be reduced to to a universally dominant strategy. It depends on the individual, and there's a large stochastic component to it.
