Isn't this an obvious marketing angle designed to get people to come to the site more often? Somehow I doubt they are really giving people less matches based on this. Anyway, assuming an even distribution of matches, matching "ugly" top "ugly" and "attractive" to "attractive" will result in an even match distribution.
I would assume that men are disproportionately more unattractive than women meaning e.g. the 20% of "hot" men get their pick of 80% of women who are "hot". Just like in real life. goes reads mystery method
Just thinking about the demographics, your average college student is between 18 and 24. While there are certainly exceptions, this is generally the age at which most people will be at or near their high for physical attractiveness.
Also, college students disproportionately grew up in middle and upper class households so they generally had access to good food, good healthcare, good dental care (including cosmetic dental care), not to mention better clothes and (where appropriate) makeup.
Furthermore, tying in to their age, college students tend to care more about their appearance than the average population. They often consider dating and even looking for a spouse to be a major activity of college. They often have more time to care about it than working professionals. They often have more social pressures to care about it. So, compared to the average population, they put more effort into looking good and that effort often has at least some results.
So, while there are certainly less physically attractive people in college, the student body of most colleges is on average noticeably more physically attractive than the average population.