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Though it doesn't seem like there's much of reason to limit the space in that school outside of it's part of there prestige that only very few make it in the first place.
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That's the point
If there's a limit then there's a point in what he's doing.. but there's nothing like that. The graduates are basically those with skills to back it up but there's nowhere that it was mentioned that there's a cap for people who can graduate there.
Basically what I wanted to say that it's perfectly reasonable if the examiners hold a hellish exams for the student and expel those without the ability to pass it, but actually trying to cut down the number of student whether he/she has the ability or not is something that he shouldn't have done.