Yes, I agree that this is the tough part, especially in the Bay Area. Once you’ve been working a few years, though, your degree matters much less to potential employers.
One way “second-tier” universities can get around this problem is through mandatory co-op and internship programs. Push students to explore the job market early on, and they’ll start their post-grad job search with confidence, a stronger resume, and a network of contacts from previous co-ops and internships. This network may even include students from “elite” universities, who funnily enough often end up in the same internships and entry-level roles as their less-pedigreed counterparts.