It’s only people who adhere to the US News rankings who think it’s as far down in the pack as US News places it, and they’re a smallish minority of students and parents.
Well this where the dichotomy of the US News rankings comes in for a school like Michigan. Even though UM has been in the mid-20s for a while, it’s engineering and comp sci programs are ranked top-10 by US News so that drives a lot of applications since students and parents put more emphasis on the rankings of a dept or major. Also GCs love Michigan and know it’s strong across the board (e.g. econ, literature, in addition to STEM) so it’s a popular choice.