downtown - I don't think non D1 schools lose out on getting the smarter applicants. While I am sure some pick schools based upon who they might want to root for, I would think just about all the top students pick their college based upon:
1. Does it offer a program/education I want;
2. Can I get in;
3. Can I afford it.
For the most part, students become fans of the school where they attend. When I went there, Binghamton was DIII. The students packed the gym for our basketball games. When students to go UCONN, for example, they go to their games, because it is their school.
Here is how it works.
I'd agree that comparatively fewer students explicitly pick their school based on who has a good athletics program, and that number is smaller the more academically prestigious a school is. Sure, a place like Hopkins might lose out on a few kids who decide to go to Duke or Stanford or whatever bc they want exposure to sports an an undergrad, but not many.
High level athletics, however, work as a general huge advertising campaign. A student who previously had not heard of, or would never think about a school, may decide to look into their programs, or seek more info, after seeing picture after picture of their campus on TV, or hearing about it all the time, even if they have no interest in sports.
This has been borne out be research. This paper from Rutgers shows that schools enjoy bumps in academic prestige among applicants when they change athletic conferences (thus getting more exposure). For some schools, it's a huge difference. When Virginia Tech moved from the Big East to the ACC, was getting 16.6-percent more applications three years later. For Boston College, the difference was 37-percent, per (
http://chronicle.com/blogs/players/does-switching-athletics-conferences-lead-to-academic-gains/30227). TCU got 50% more applications, and became 14% more selective.
http://espn.go.com/blog/collegebask...3340/study-hoops-success-begets-more-students
That study showed the impacts on Butler, VCU, BYU and others.
That impact is felt even at lower levels. I remember that American University, where I spent my freshman year, enjoyed about a 1 increase in their average ACT score among freshman after their basketball team made the NCAAs for the first time (exposure!). Bryant University experienced a similar bump.
This is to say nothing of the impact that athletic success has on alumni giving, which both impacts a US News Ranking, and academic programming.
That, of course, doesn't mean that the system is ideal, or that every school should jump to D1, or that some schools who have haven't botched their transition horribly, in a way that hurts students.