Yes, it is fair.

Is it fair that just because someone has the ability to pay, they ought to pay? If a millionaire was planning to move in, and you said "for you, you pay 100% of rent," then the millionaire would probably just go somewhere else. Afterall, they're probably looking for cheap, since they could surely afford a place to themselves or perhaps even a house (depending on location). Likewise, the students may be "poor," in monetary expense, but one could argue that they are simply spending their money on other things that are important to them, and so why should they get a free ride because of that?

In the situations I've been with, I'm fine with (rent/number of renters). the lease holder gets her choice of room, the rest is first come/first serve.