How can i set the threshold value for the target variable. For example if a target variable is chance_of_admit and it has values from 0 to 1, how can I pick a value and so that I can convert it to 0's and 1's to perform logistic regression
So there two ways of doing this, IMHO,
By creating a well balanced target variable by choosing the right threshold. As I suggested in the comments above. In doing so we are simply taking care of values which should be treated as positive which would otherwise become negative if we take lower threshold.
By using the mean threshold and that will generate imbalanced target variable and when you perform the modelling, you can see the ROC and PRC curves and decide the threshold based on that. But keep in mind, it also depends what kind of problem you are solving.
Usually, the threshold is 0.5. So when you make a prediction from a binary classification model, the prediction will be a probability, and 0.5 is the threshold for assigning classes based on this (estimated) probability.
However, in your case, the dependent variable $y$ is something like a (pseudo) probability, as far as I understand. So you could also check if predicting this value, using a regression approach, would be an option.
You could look into beta regression in this case: https://stats.stackexchange.com/a/29042/224077