In fact, this was a well-intentioned lie by Hudson. Those eliminated in the first round were truly bad students.
Everyone was working hard together; the lazy ones were in for a whipping. With such a training atmosphere here, there really weren't any students who were truly slacking off.
The purpose of the lie was to make everyone believe that the gap in talent wasn't so insurmountable—that with enough effort, it could be bridged.
Sadly, while the students with average talent were working hard, those with natural gifts were not resting on their laurels; they were struggling in the same intense competition.
This included the noble students who had completed their basic training; they continued to practice daily to slightly increase their odds of Awakening the Life Seed.
It wasn't just physical training they were diligent in—academic classes received equal effort. Especially those who had finished basic training, they were putting in great effort in scholarly studies.