Prior to COVID (2019), 21k kids applied to MIT. This does not strike me as an extremely large number compared to state school alternatives. You mentioned San Jose State. 35k applied to SJSU that year – far more than MIT. The most applied to colleges, like UCLA, received over 100k applicants.
The kids who apply to MIT are a unique self-selected group that are not typical kids. I expect this group generally considers far more than just which college will yield the highest expected salary. Some probably want what they perceive as the MIT experience. Some probably were impressed with something that is offered at MIT, but not alternatives. Some probably are influenced by peer pressure from friends/family/school/community/… Some probably are big on USNWR type rankings. There are likely many contributing factors that vary from one applicant to the next.
I am among this group. Many years ago, I applied to MIT and was accepted. To Initially get down to a more manageable list of possible colleges, I started with a long list of all colleges in the United States that offered my preferred major of electrical engineering and were at least somewhat selective. This left hundreds of colleges. I then rated these colleges in a couple dozen criteria that were important to me at the time. I considered things like location, class size, available of desired ECs, etc. I did not have an expected salary component to the ranking. On this ranking list, MIT was among the top 2. After I had finally applied and been accepted, I was more subjective in selections and placed a greater emphasis on things like feelings and general fit. One of the reasons I ultimately decided on a differnet college over MIT was because I felt that a non-tech college might offer more opportunities, if I changed my mind and decided on different non-tech major when I was in college.