I think you've got two problems that might have obscured each other.
First, as far as I know, you need to complement your hosts.allow file with
a restrictive hosts.deny. One that contains
ALL: ALL
would be fine.
Then, you have to make sure to specify the particular daemons correctly.
tcpd will try to match "telnetd", "ftpd", etc., against its own argv[0],
but it's lkely that your inetd.conf calls telnet as "in.telnetd" (for
example), not "telnetd". You may just want to write
ALL: LOCAL, .yale.edu
unless you have a good reason for enumerating particular services.
Hope that helps,
Shawn