Thank you Mermaid for starting this thread. I am eating it all up, especially the theories introduced by Paula and the on-campus perspective by BR and newyorker.
As a mom of little boys (5 and 2) I actually think about this stuff a lot. My middle-class, struggling parents busted their butts to put my brother and I in separate private schools, because the different curriculums were exactly what we needed. I got a fantastic education and was very well prepared for college, but a whole lot of nonsense went with it. At my school you had the doctors' children who were pushed into being doctors, you had the kids driving BMWs, and lots of others who just took mommy and daddy's money and status as if it were theirs too. (To this day one of my favorite TV quotes is from the Cosby Show. One of the daughters comes to Cliff and says her friends say she is rich. "
You are not rich," Cliff says. "Your mother and I are rich."

) My husband also went to private school, and his parents had money and status in his smallish hometown, but after college he was definitely on his own.
So now, thanks to more butt busting and a number of bold choices that most of our friends wouldn't have made because they were difficult or uncomfortable, my husband and I can fairly easily afford to send our kids to the same kind of school. We even have a place at the beach, for god's sake. But I am
so afraid of my kids being too pampered. I have a very unique perspective -- I have seen what happens to many pampered kids first hand and it frightens me. They eventually turn out OK, but in many cases it takes awhile and the journey is painful.
What we are trying to with ours (so far) is encourage problem-solving and independence, focus on a love of learning, require some level of giving to those less fortunate, and not give them everything they want but provide everything they need.
These things are all easier said than done of course. I went light on the Christmas presents this year, at least compared to other parents I know. I was starting to feel guilty, like I was depriving them. Which is ridiculous, but when the boy around the corner gets one of those battery powered motorcycles to ride around the neighborhood, and my kid gets a Transformer and a little remote control airplane, I start to wonder whether I've done the right thing, and how long I'll be able to keep it up.
To Mermaid: there is a boy I went to high school with who had similar grades at Duke in his freshman year. Basically he went to school and could not stop partying. I think he had a 1.3 or something. Anyway, he eventually brought his grades up, got into medical school and is now a physician in his father's practice. So it can all turn out OK. I hope Alex finds what he really wants and loves to do. When you combine that with supportive (but expectant) parents like yourself, he cannot lose.
