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It's unlikely to be a sunken cost fallacy.

You're technically right with "Admission test measure how well you can prepare for admission tests, nothing more.".

It's definitely not a silver bullet and doesn't assure success after admission. nonetheless, the ability to prepare for these tests is strongly correlated with success along this path.

If they can't be arsed to prepare for them they're unlikely to bother with studying either, making their admissions pointless too.

And if they attempted to prepare for the test but still failed... Then they're unlikely to be able to learn in the University setting either and should follow up on other avenues.