Firstly, I don't agree with Oxford being "chronically underfunded". It is hardly poor - St John's alone has £22m, and I don't care if that's tied up in art or land or whatever, it still makes them rich.
Also, I personally can't see a problem with private school students paying alot more fees - they're happy with the principle of paying for education anyway, so why not just knock it up a level?
Also, I hardly think funding X hundred students a year to study Classics or whatever should ever be anywhere near the top of the education departments agenda - I'm afraid that, although in an ideal world Oxford would be drowning in wealth (although it has come pretty damn close quite a few times!), there are simply bigger fish to fry. Fair enough there's an arguement to be had that perhaps medical students' funding or whatever should be given a extra help, but the archaeology dept? (And I say this as a prospective arts student myself!)
And as for the point about not letting in foreigners, if Oxford wants even to pretend that it's anything like the best in the world, it's going to have to take the best in the world, and despite what the BNP or whatever might think, that won't necessarily be British. There are quotas in place to stop Chinese (or whatever) students anihilating domestic ones in the admissions process (although Chinese schoolchildren perform way better on average than british do in their A-Level equiv. (I believe - I remember that from the series of articles in the G2 a few months ago, i think!)).
That's saying nothing of the fact that international astudents make a university much more interesting and exotic, nor the financial benefits, nor the fact that the above post is downright xenophobic.
well thats my little outburst over...