Ideally, I think everyone should be allowed into the university.
I have several friends who did poorly in high school. Back then they wanted to have fun, party, and were not interested in academic achievement.
Once they got older, they decided to go back to school. They had to study hard and retake a lot of high school exams to get to the university.
One woman is a somewhat famous and well respected lawyer. One is an electrical engineer with a great job. One architect, and the last one a psychologist.
They all had the "intelligence" / endurance to do well academically they just did not follow the same schedules.
People who did not do so well in high school but have passing grades can really perk up at the university.
Of course, if you lot everyone in, most will fail. The distribution of who fails and who does not might surprise people.
However, we do not have limitless resources to allow everyone who wants to a shot in whatever field they feel like. There is not enough physical space, there are not enough professors and teachers, nor labs etc
Basing entry on standardized merit is in my opinion, the best we have so far.
I wonder if a future were Batchlor degrees are possible to take online if the system could scale to allow everyone a shot.