When you put it that way, to me it sounds like a great thing. YC has always sought to filter out the resume-padding sort of founder who sees YC as a step up the status ladder. Such founders are not up for the gruelling slog of really building a startup, and tend to bail not long after the batch since they've already gotten what they wanted out of it.
People should apply to YC because they believe it would them them build a successful startup, not because they want prestige. If expanding YC leads to a decrease in prestige (alongside an increase in real value to startups, as Jared explained above), that's a win for everybody: more business-builders get access to YC, YC gets to fund more successful companies, and status-seekers can find something else that will look better on their resume.
In this sense YC is very different from the elite colleges whose brand depends on their exclusiveness. The upper bound on YC's expansion is how much startup opportunity exists in the world.
People should apply to YC because they believe it would them them build a successful startup, not because they want prestige. If expanding YC leads to a decrease in prestige (alongside an increase in real value to startups, as Jared explained above), that's a win for everybody: more business-builders get access to YC, YC gets to fund more successful companies, and status-seekers can find something else that will look better on their resume.
In this sense YC is very different from the elite colleges whose brand depends on their exclusiveness. The upper bound on YC's expansion is how much startup opportunity exists in the world.