@OhiBro Like many here, you’re thinking of this all wrong. Selective colleges are not “lowering their standards” because the “standards” that most selective colleges use for acceptance are the ones that they decide, not those that you decide.
Acceptance to colleges with low acceptance rates is not a competition in which the “Best Students Win”. The admissions people aren’t looking to fill the class with the kids with the highest GPAs, the highest SAT/ACT scores, and the largest number of ECs/awards. They’re looking to build a diverse class, so being one of 1,000 applicants with 4.0 UW GPA, 1600 SAT, and the same set of ECs is not the single and only standard by which most selective schools decide who to accept. To paraphrase, that may get their notice, but it likely will not, on its own, get their interest. Other kids, with a different profile, can get their notice and interest with a lower GPA and a lower SAT. One other way to get their notice is to belong to a group that has, historically, been underrepresented in their undergraduate population.
Most kids who are, as you write, “flooded with scholarships” have done amazing things, which do not have standardized grading. Most kids who receive scholarship of any size have competed against hundreds of other kids, and managed to distinguish themselves in ways that SAT scores cannot.
Colleges and institutions have a limited amount of money to spend on scholarships and awards, and believe me, they’re not handing them out to kids unless those kids have made a serious impression on them. Full tuition at a top private school runs to a total of about $220,000 dollars over 4 years, and even schools with very large endowments do not hand these amounts out like candy.
So you can bet your boots that every kid who gets a scholarship has far exceeded any standard who which you can measure how qualified they are for acceptance to a very selective college.