You almost hit on it, but I think the real problem is the economy got worse first. That trickled down to increase pressure in college and high school.

Or just go to a state school. My alma mater apparently has an 87% acceptance rate. My extracurriculars were playing Counter Strike, Battlefield 2, and WoWcrack. It doesn't seem to have had any negative effect on my life.

Both of my kids did just fine at state schools. One at the state "flagship" university, and the other at one of the regional schools.

This has to be some segment of the middle-class and especially newly-upper-middle-by-income-but-not-socialization running into this trouble. Parents “under” that set just send their kids to [name of state] State where OK test scores and grades do the job. That’s a large majority of parents of college-bound kids, right there.

Parents “above” that set let the legacy admissions advantage and golfs-with-Ivy-admissions-officers prep school counselor sort it out.

Kids seriously looking to get into highly-selective schools are a minority.

This does mean you’re opting your kids out of elite schools by not playing that game from an early age, but hey, you and everybody (the colloquial “everybody”—most folks) else.