The facade is central to the business model. If the only people going to elite schools were rich and politically-connected:

(1) It would look bad for everyone involved.

(2) The schools would lose their prestige.

Right now, if I want a good lawyer, I look to Yale, followed by Harvard/Stanford/Chicago. I have a 70% chance of getting a brilliant lawyer, and a 30% chance of getting a rich douchebag. For law firms, it doesn't actually matter too much, since reputation is mostly circular.

If I want a good engineer, I look to MIT/Stanford/Caltech. I have a 80% chance of getting a good engineer, and a 20% chance of getting a rich douchebag. That's not a guaranteed hire, but it gets you in the door. Hopefully, my interview will screen out the rich douchebags, but it doesn't always. That model is breaking down a little bit, since people are starting to notice that the typical engineering applicant from e.g. Georgia Tech, Northeastern, or similar is better than MIT/Stanford/Caltech+++.

Upside to rich douchebags: They're past the first round of all hiring processes. Between university brand and network, their kids can always find at least upper middle class jobs. In a best case, they can go on to be president! Or if they're running a company, they don't look obviously nepotistic.

+++ It's worth noting there are sample biases here. Most qualified MIT/Stanford/Caltech graduates can find jobs without going through proletarian hiring processes, so the people who do actually apply for jobs through my web site are prefiltered.

The schools won't lose that prestige, however, because the majority of the kids they admit are academically gifted. If, say, 30% of a class are legacies, that means they pick and choose 70% of the class from academically gifted kids who are verified to be, "Our kind of people". (With all the exclusionary connotations of that phrase.)

What we're talking about is the connection, during formative years, of the academically gifted to the ultra wealthy and ultra powerful. The idea that this would result in less prestige is fanciful in the extreme.

The other side of the argument is that if the facade is not there, if they only admit rich people, the university will lose its reputation and become irrelevant overnight.

The thing that gives elite universities their reputation both their academic reputation and the elites that attend them. If they lose the academic reputation, the unis become irrelevant and might as well be a party house for rich people; no one will care except tabloids. If they lose the elites, the universities will still be prestigious universities.

So to spell it out, what I’m saying is that rich people attending elite universities are not important for elite universities. It mainly benefits rich people.

Most of the financial aid given out by these schools isn’t federal aid. They even give full rides to international students who aren’t eligible for federal at all, and middle-class kids whose families have too much income to be eligible. This aid is funded by the endowment which is donations from rich people.

I think when people say Princeton receives a lot of federal money, they are talking about research grants, and possibly the effective subsidy that comes from the tax deductible status of donations from rich people. Each of these adds up to a lot more money than the Pell grants.

If you take away the rich people, the school won’t be able to afford to operate this way.

> The other side of the argument is that if the facade is not there, if they only admit rich people…

I believe the point was that these schools don't need to accept subsidized student loans or other forms of federal funding. That doesn't mean only admitting rich people; they have enough resources to offer student aid to bring in the academic overachievers on their own, thus maintaining their reputation without federal help.

But the smart people get networked into powerful circles. Lots of smart people get nowhere without having connections to people who control the money.