The schedule well, it's just that Stanford and USC are way down of late. They play five ACC teams and the ACC has been down other than the team that owns that conference. Syracuse and Michigan were solid opponents, and fairly often you only play 2 solid opponents in 12 games.
Had they been in a conference, they might well have been torched in the CG and knocked out.
There was no way the committee would omit a 12-0 P5 kind of a team.