I don’t think this is the issue Penn is trying to fix here, because even if both these are indeed true, Penn may still have a problem. Penn is not worrying about losing kids to just MIT or Chicago. They are worried about losing kids to HYPS.
And allowing kids to apply to MIT and/or UChicago EA may be fueling this problem for them.
A certain number of students may be using the “financial aid not enough” escape hatch and an admit from a school like UChicago or MIT as a safety parachute to go after the most prestigious college they can get into. They can now bail from Penn and try to get into HYPS at Penn’s expense. If everything else fails, they still land at a good school. These kids may be applying to Penn just to boost their admission chances even if it is not their absolute top choice because they really don’t want to risk an SCEA application to HYPS. So they choose an Ivy like Penn with a relatively high ED admit rate in the hopes that they will make it in. It’s a risk mitigation strategy in an admission environment where there is too much unpredictability in where a student might get admitted.
For such kids, using the finance escape hatch right after they get a nod from an MIT or UChicago is a way to have their cake and eat it too. They can’t just apply EA to these schools. The admit rate for EA schools is not close to the 23%-25% at a school like Penn (Yeah, I know that the real admit rate for unhooked candidates may be lower, but these students may not realize that). Once they get an admit from a top 10 school, they could go school shopping for even more prestige by throwing a Hail Mary pass at HYPS. They can’t do that now. Penn just took away their parachute. Now a student would have to think really carefully if they want to turn down their ED acceptance. If they turn it down, they have so safety net in case they get rejected at HYPS.
For whatever reason, Penn is finding that their ED pool is not giving them a near 100% yield. Prestige shopping by some students using the EA admit safety net may be the reason.
Of course, I am just speculating here, but I can’t think of any other rational reason to bar the EA applications.