So you would say that group C is the best place to be?
This is not so much about such policy choices by colleges (all colleges will have some mix of abilities among students), but about student choice of college. Not every student chooses a college where s/he will be in group C (many end up in group A or B due to following the scholarship money, while others end up in group D or E because they prefer the most selective / “prestigious” college that admitted them).