Earlier quoted context omitted.
Unsubstantiated hearsay. How does a Master's imply you are a PhD dropout? Plenty of people go with the expectation of only Master's to begin with. Heck, this distinction is even made when you enroll in the Master's program in Stanford CS instead of the PhD program. They are treated as different tracks that you can't move between.
When I was a physics undergrad student, I remember being told by advisors that a Master's was considered to be a booby prize. We were told that grad programs would only consider students who indicated an interest in a PhD. One possible reason is that grad student funding was limited, and they didn't want to waste it on students who weren't going to contribute to research. All physics grad students were fully funded.…
It could be on behalf of their employer - they have a shortage of a certain class of student at the university.
or it could like engineers who too easily recommend extremely over-powered computers for friends and family not in the industry who are thinking about buying a computer.