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Liberty in Context
Internships are great opportunities.
Totally valid worry! Most students can't budget three months of loan money for a quarter internship. I couldn't have if CATO were not a paid internship when I was there. (My absence, I must point out, would have been a grave loss to the mission of the CATO institute.)
K's worry is analytically different from the complaint that Northern Iowa State is underrepresented at The Limo Liberal Institute compared to Harwich University. It so happens that more Harwich undergrads have the resources to take an unpaid internship. But the Limo Liberals don't prefer Harwich students for their internships BECAUSE they can afford to take those internships. You may think that Harwich students really are more meritorious than the Northern Iowa State ones. But a 100% meritorious Harwich applicant might be unable to afford to accept the internship that a rich 10% meritorious NIS applicant could. So K can have a point even if you do believe that Ivy Schools take the most meritorious applicants.
Your point about gratitude is at most trivially true.
Also, you lose track of the definitions of your terms. For example, you use multiple, conflicting definitions of internship in ways that confuse your argument.
Finally, as the commenter above noted, you misrepresent AK, if not downright misunderstand her.
I'm no fan of AK, but I was not impressed by this critique.
However, as an unrelated musing on "prestige intellectual work," you make some good points. You also get some things empirically wrong (based on my experience, at least). For instance, it's not really an Ivy game, it's a Harvard/Yale/Princeton game. Often only Harvard or Yale.
Internships are great opportunities.