[tanzam75]

Application fees basically pay for the costs of running the Admissions Office.

There are very few economies of a scale in an admissions office. Each additional application takes an extra half hours to read. Thus, a certain number of additional applications will require an additional Admissions Officer to be hired.

(No, they're not that well-paid. Remember that applications are typically read by two admissions officers, that they have to meet to discuss candidates, and that the reading season only lasts from December to March. The other 2/3 of their time is thus spent on "marketing" activities, like going to college fairs. But it's not like you can eliminate this expense to cut the application fees -- the admissions staff has to have something to do during the rest of the year.)

Because costs scale in direct proportion to the number of applications received, application fees are a natural way to pay for it.