Great so I've been giving to Stanford all for nothing? How is this even legal private schools should be able to admit whomever they want and teach whatever they want. If you don't like it, don't apply.

Legacy is a huge incentive for giving these colleges money which they then use to become a better college. This is a moronic law that I really doubt will ever be enforced, but if it is will result in slow degradation of educational quality over time.