At the same time there are all these small colleges that are closing or are in severe financial trouble. The issue isn’t one of seats per se.
The problem is that for many of these elite schools, there is intense competition to get in. Not because students are in danger of getting a better, more challenging education than they might at a slightly less competitive institution, but because the very act of getting in would give them the golden ticket that for the rest of their lives will gain them entry in social circles and job opportunities that simply are not available to graduates of more mundane schools. All the positioning and maneuvering, activities and classes and test prep and so on, is taking place in high school and earlier. Thousands of very deserving applicants won’t go to Harvard, as much as they would thrive there and as much as the school might benefit from their presence. Setting an even higher standard means at a certain point that only the most carefully cultivated students, with near-perfect test scores and for whom a B their sophomore year of high school would have been disqualifying, even have a glimmer or hope. It means that kids, teenagers, cannot make even a tiny misstep. It just means more of these kinds of games, but at a younger age, and believe me those games are already being desperately played by certain parents.
Really there are two issues here. One is the exaggerated importance our society puts on degrees from particular schools - look at where Supreme Court justices got their degrees. It’s not exactly a representative sample of the US population. The other is of the other end, the issue you mention, of requiring an expensive entry into the workforce, an entry that is not available to everyone, even when they can afford it.
