Graduation rates at universities for the elite are nearly 100%. Getting into the club is the only hard part and everyone involved knows that.
Empirically, what's required to get into the club is being wealthy enough to afford the private schooling, tutoring, and extra circular activities necessary to help your child game the admissions process.
As long as people value these prestigious brands, the elite will continue to buy them for their children. It's got nothing to do with education itself, which could be obtained any number of ways already.
If their process was an "Empirical, blinded, skills-assessment", and they funded anyone who met their predefined requirements, we'd have a real alternative to class-based universities. At least for anyone willing to create their own business.
YC is already more fair (less gameable) than the elite universities, but it's still far from being fair enough or big enough to really change things.
The student can then turn around to some great companies and say "I got into X university, but am thinking of waiting a semester and want to learn a bit about your business. Would you be open to some sort of internship?"
I don't know if that is the correct solution though. Much of what I learned came from being at school, but not necessarily the classroom. I learned a ton about alcohol and drugs and sex and other things that simply being in an environment with so many of my peers produced. Additionally, I'm a designer. If I weren't an editor for the school paper, I'd never have picked up a copy of creative suite and probably would be working a miserable corporate job somewhere otherwise.
The way to fix this is to sue lots of employers for requiring or discriminating based on college education. Or at least win a few high-profile cases.
This is the first I'm hearing that IQ testing is illegal as a basis for employment. AFAIK the military and many police forces employ IQ/aptitude tests as part of their hiring process.
Though sometimes we're trying to tech-fix things which are broken on a whole different level. Education is effectively free today. You pay to get the certificate. I think that's a broken system.
(I am not opposed to legislative fixes! I'm a statist liberal Democrat. I'm confining my response to the terms 'sama set out.)
Whereas a startup that had a really good solution for inculcating the kinds of skills and values white-collar employers are looking for could outcompete universities instead of legislating them out of the picture.
When people discuss the value signaling provided by elite universities, their first example is usually "the diligence and hard work it takes to get into the university". That strikes me as the kind of value you can find ways to signal just effectively without asking for $150k.