I'm 2 years out of undergrad and thinking about applying to some math graduate schools, specifically operations research and maybe financial engineering. I was a math major, with middling grades, and now I work in IT.
My question is this: it seems that even for not top-tier schools, a high GPA is crucial, as are great letters of recommendation, wonderful GRE scores etc. Why? If I'm willing to shell out 50k for grad school, and I've met the prerequisites, and I show an interest in the subject, why wouldn't a school want to have me? Is it purely so that they can claim they have a low acceptance rate?
In other words, if a grad school (again, not top 10 let's say) has a surplus of people who want to take that program, in a field like math, why not just hire as many professors as it would take to teach them?
I guess I don't get all this pressure to be perfect.
EDIT: I am referring to masters programs in particular, where stipends are not as common.
EDIT: Ok, Pete and Paul's answers make sense, given the current set up of grad school. I can imagine a different set up, however, that would make it less competitive for students, more profitable for professors and more about learning than prestige.