Does attending an Ivy League or prestigious college affect the way potential employers view your application?

The short answer is Yes.

The long answer is:

Applying for jobs and internships is affected by a few things. Opportunities, Connections, Uniqueness.

You can be unique in a variety of ways outside of coming from an Ivy League (or equivalent) school. Someone who is top of their class at Penn State is going to be more impressive to most employers than someone who was just average or worse at Dartmouth or Cornell, for instance.

"Opportunities" is a place where school matters, as the best companies will actively recruit from targeted schools. Here you want to go to schools that are the best at what you want to study, rather than just overall "name" of the school. Top state schools like Penn State and Univ. of Michigan are going to do well in this department too.

"Networking" is where an Ivy League-type school can help you. Small, elite, private schools are generally going to have closer alumni networks, and catching the attention of those alumni is easier when you are in a class of 1000, rather than a class of 10,000. Also, these these schools are considered elite because their alumni are in prestigious places, so the alumni networks are going to be full of important people as well.

Conclusion: Go to the best school for the thing you want to study. That's where the best companies in your career field are going to recruit from, and likely that is the school all the most prestigious people in your career field attended themselves.

It may depend on the field/profession you are considering. If you are planning to go into law, medicine, engineering, aeronautics - then yes, the prestige of your institution may have some influence on your career outlook; however if you are going into a more general area (and not to belittle these disciplines in anyway) such as English, communication arts, mathematics, or the humanities - your grades, extracurricular activities, internship experiences, and other qualifiers may be what attracts you to employers.

My own experience is that the answer is a qualified yes. What I mean by this is that it may give you an advantage in certain situations and with some employers, but do not assume it will! When I first got out of Penn, I wanted to work in the medical field for a short time in some capacity before using that experience on the commercial side of medicine. My first job was as an orderly and psychiatric technician at a hospital, and for that the Ivy League source of my degree did not matter. However, when I applied for a sales position with a pharmaceutical company, it did make a difference, as it did later when I wanted to move into marketing. The funny thing is that I did not highlight where I got my degree; my future employers noted it themselves. Essentially it helped mark me as someone who worked hard and had an already presumed level of 'intelligence' (right or wrong, fair or not).

A college with a good brand name (a "prestigious" college) is helpful in one respect: It helps get you the job interview. It really catches peoples' attention and makes your resume stand out.

Getting the interview is hard these days. Many good jobs have lots of applicants. If your resume stands out, you get to the next step.

Once you get the interview, the brand-name college is not nearly as important. That's true when you get the job too.

Prestigious colleges will have more resources and excellent caliber of professors available but it all comes down to what you do while you are at the college - how you make use of the resources already available be it a great college or a good one. You also need to look at schools that are a teaching school v. a research school. In teaching schools, the professors will do the teaching and in research school the professors may do some teaching but most of the time they focus on their research while their TAs do the teaching.