prestige is a combination of fame and selectivity I recall a debate on the value of college( Peter Thiel vs some college admins) and Thiel asking his opponent (a university administrator) if Harvard is providing such a great value to the world why are they making it so hard to obtain for people? Good question.
Nobody is pretending that receiving money from Peter Thiel makes you better at whatever it is you do.
But a lot of people, such as Harvard admissions, do pretend that attending Harvard has such benefits.
In contrast, no one at Harvard is pretending that they couldn't afford to enroll ten times as many students.
Put another way, Thiel fundamentally doesn't fund most people because most people are bad investments. Harvard admissions isn't claiming that it won't admit you because you're a bad investment and would devalue their brand. They're claiming that, if you were admitted, the experience of attending Harvard would increase your personal quality, but they nevertheless won't admit you for undisclosed reasons.
