You have to first answer why few locals outside Stanford-Berkeley-MIT-CMU are hired out of school. Is it because all non-top-4 schools under prepare students? Is it before foreign workers are that much better? Or is it because companies are looking for underpaid workers they can abuse and keep in a state of limbo?
If CS degrees from non-top-4 schools are not valuable, best to get that out so US students are not studying useless degrees.
At the moment, at least in the trillion-dollar web companies, it seems not many people are being hired straight out of school at all. A new grad would have to really stand out to get hired in a field of experienced candidates. The potential cost savings of hiring a new grad doesn't seem to matter much to these companies.
In the past, I've seen a lot of new-grad hires from the top 30 or so schools, but not so many from the top 5. More likely Michigan, Maryland, or Washington than Stanford or MIT (I'm on the West Coast). Pandemic-era Stripe was an exception, they seemed to hire only top 5, but they were also offering outrageous pay at that time.
Someone graduating from a school not in the top 30 probably needs to adjust their expectations away from Google or Meta, at least for a first job, unless they have good connections and interview very well.
Back to your original point though, I think it's plausible that most schools not in the top 30 (charitably, top 50) are actually incapable of some combination of (1) attracting sufficiently smart and motivated students and (2) educating them adequately.
This would prevent abuse of foreigners who are underpaid. It would also allow most of the applicants to go to good jobs (FAANG) which can pay premiums salaries.
Reverse auction is the best way to go. Good for foreigners, good for top companies, economically the best option.
** Wait, so I can just open LLC and get H1B visa for it? There have to be conditions and limitations, otherwise it will be misused.
No, you have to first post a job posting at a low salary, preferably with an in-office requirement in a HCOL city. If you get applicants, give them Leetcode Hard and no one will pass.
Then, when no one applies or passes the interview, you claim there is a shortage.
If CS degrees from non-top-4 schools are not valuable, best to get that out so US students are not studying useless degrees.