Hi Jen,
Here are my thoughts, having just completed the "race" (i.e., college apps and acceptances) with my daughter.
The pressure we put on our kids to get into a good school is enormous, mainly because there are so many students competing for a limited number of places. The path to getting into one of the top 25 national universities is to take the most challenging course load your school offers, have a high GPA (above 3.75 weighted, and in some cases, above 4.0, weighted), and score above 650 in all sections of the SAT. In addition, students should be well-rounded, having participated in multiple clubs and activities, possibly sports, and been active volunteers. I know that sounds harsh, but take a look at the common data set statistics for the top 25 schools (as ranked by US News and World report) and you'll see what I mean.
To give you an idea (hopefully, not to scare you!) here are some of the acceptance rates for the colleges my daughter applied to -- it's a bit daunting. This year, only 11% of the total number of applicants were accepted into UC Santa Cruz (rank: 72), whereas 4 years ago, around 40% of the applicants were accepted. Less than 7% of the applicants were accepted into Northwestern (rank:12), compared to 27% 4 years ago. About 29% of the applicants were accepted into Emory (rank: 20) this year, as compared to 34% 4 years ago.
Given these numbers, we're delighted that Laura was accepted at UCSC and wait-listed at Emory (even though the chances of getting off of the wait list are slim-to-none). What's more important, is that we all think UCSC will be the right school for her, given its strength in her chosen field, extra-curricular opportunities (such as clubs, study abroad, internships, and research opportunities), the type of student body, instructor/student ratio, location, etc.
There are over 3000 colleges and universities in the US, and there's a right place for everyone. Most of these schools don't require the kind of academic rigor needed to get into one of the top 20 or even top 100 schools, and most of them offer equally good learning opportunities and environments. The real proof is in getting a foot hold on a decent career path afterward. (After all, that's the real goal, right?) Unfortunately, with a downward trending economy and increasing (though stabilizing) birth rate, things are just going to keep getting more competitive, I'm afraid, hence the drive to get into the best school possible. Still, there are certainly more jobs available than can be filled by top school students, and graduating from a top school does not necessarily guarantee getting a top a job.
The trick at this point when your children are young, though, is helping them strike a good balance, and that's going to depend on your children's talents, personalities, and desires. My daughter is the driven type. I actually objected to the amount of time she spent with her main activity and the course load because I was concerned about the stress she was putting on herself, but I had to let her make those decisions, and she was determined. My son, on the other hand, is a total slider (not slacker), and is happy to do just enough to get where he wants to go. When both were younger, I supported whatever they were interested in, but gave them a bit more direction in terms of encouraging them to try out a variety of activities until each found the things they liked to do. I always insisted that both try their hardest, but I never set a bar for grades. Fortunately, my daughter did that herself (it can be both a blessing and a curse to have a self-motivated, competitive child!), but my son, to my frustration, was satisfied with Cs and Bs, mainly because he refused to do or hand in assignments; he still got into a good college (also UCSC). No matter what, I always insisted on good sportsmanship, though, regardless of whatever type of activity or competition the kids participated in (sports or academic).
One thing I was adamant about, was not over-scheduling in elementary and middle school, and leaving plenty of time for free play and exploration. That included encouraging lots of reading time (with or without me), educational video games (with or without me), and some educational and "worthless" TV time (again, with or without me. It's amazing how much value a parent can add to an otherwise junky show.) We took lots of outings to the beach, museums, and unusual places (like to an old cemetery to read historic markers), hiked a lot during the summer, and did community service as a family or with the scouts. Both kids were active in scouting, which, if involved with a good troop, can offer tons of opportunities for friendships, exploration, adventure, leadership, and plain old fun with a minimum of stress on academics. In fact, my daughter's desire to study economics and go into business stemmed from the fun she had selling GS cookies! We allowed each only one scheduled activity beyond scouts and religious school at a time. This gave them the foundation to develop the type of well-rounded experiences that colleges like to see, since by the time they got to high school, each had a pretty good idea as to where their passions lay.
The point is, you don't have to be a salmon swimming up stream, but you don't have to totally go with the flow, either. There are lots of ways to build strong, inquisitive adults, and if you work together with your kids, you'll find the path that's right for them, and you.