I am always amazed by the sheer stupidity of the two class system in manga schools, but this one takes the medal: if the power of a country is decided by the number of mages, why waste half of the best students of the country? We are not talking about some random munchkin, they are the 200 best of the whole country...
Think about real life: not everyone that enter a medicine university become a surgeon, but you still need a lot of general practitioners. Not everyone needs to get a Ph.D in physics, but your country is way better if everyone knows how to read and do basic math. Not everyone become a CEO of a multinational company, but you still need an army of office workers. You have already selected the 200 best mage of your country, you should really treasure each and every one of them. In their place, I would try to train everyone that shows even a scrap of talent: the best ones get a tuition, the others have to pay, but I bet that everyone with magical abilities will fare way better then the ones that doesn't