Because you want to have a minimum level of ability so that you can maintain a certain pace of instruction. If you have students of various levels of ability and you teach high tier material, most of those kids will fail and drop out. Why set them up for failure?
That's a nice thought, but it's about status. If they let everyone in, they'd lose status, and having an MIT degree wouldn't have signaling value. If what you said was accurate, they'd just set minimum qualifications and accept way more people.
