Best Answer - Chosen by Voters
DS is right--but the state universities' lower admission standards aren't the reason that a lot of those veterans, parents, older students, and students with full-time jobs choose to go there.
Prestigious schools, with higher admission standards, tend to attract more students from relatively well-off backgrounds. Their parents had money for good secondary schools, tutors, and test prep courses, and now they're able to pay the high tuition. Those students typically go right from high school to college, so they tend to be "traditional-aged" undergraduates (18-25 years old). They're less tied down and more able to pick up and go wherever the most desirable school is. They tend to enroll full-time, and they aren't as likely to be married or have kids. Schools where these people make up most of the student body will cater to their needs and interests--lots of dorms, traditional activities on campus that appeal to their age group, classes and office hours mostly in the daytime, etc. This works great for those "traditional" students, but not so well for people who don't fit that profile.
State colleges--particularly those in urban areas--tend to attract more older students, who are often self-supporting and therefore less well-off. They often have more complicated lives--spouses, kids, full-time jobs--which take up a lot of their free time, and make them unable to move somewhere new to go to college. They make less use of campus services like dorms, traditional campus activities, etc. and more of services like childcare and evening classes and office hours. They often enroll part-time. And since these people are their primary market, these colleges will do more to cater to those needs and interests, which makes it all the easier for that kind of student to decide to enroll there.
So, while many of those students could probably meet the admission requirements of the more prestigious schools, they choose a college where their needs are better met. Sure, some older students choose state universities because that's the only place they can get in--but a lot of traditional-aged students go to second- and third-tier schools for the same reason. Older students will usually choose the best-quality schools that they can fit into their lives, because moving somewhere new to enroll in a college full-time, in daytime classes, and having mom and dad pay for it, just isn't an option for them.