I went to a state school with a similar strategy: accept basically everyone then thin the herd with some brutal weed out courses. I don't think it was some cynical strategy to raise revenue though; they also offered tons of remedial courses to give ill-prepared students a chance to catch up.

imo this is an appropriate way for a public school to operate. everyone gets a shot, but people that can't make it get failed out early. way less debt for the student than dropping out years later, and more frugal with public funds too.