You need to start with 2 mods to your site. First is Dependent Fields. This allows you to arrange the schools by city=>state=>school=>class and so on. You can run them in pretty much any direction you want.
Here's the link for the modification. I've got it on my site right now, and it makes life much easier for the members to find each other.
http://www.expertzzz.com/Downloadz/view/4261
The next mod I would recommend is one of the more pricier single mods offered for Dolphin, but it's another I am running and it's simply amazing. It's called Profile Types Splitter Premium. This one allows you to run up to 30 different types of profiles (which you will want to consider to help limit your lists. Colleges, Universities, Community Colleges, Vocational Schools, etc.) Here's the link:
http://www.expertzzz.com/Downloadz/view/3323
As far as the comment about Classmates.com goes, that site does not take as many hits as people think it does. It has severe issues with ease of use and types of communication available. Myspace, Facebook, yahoo and so on also try to do what your doing. If you think you can do it better, making it easier for the members to use, then go for it.
Besides, there are millions of porn sites out there, and yet people keep grabbing Dolphin to start their own porn dating site. Go figure on that one.
Thanks so much for your response. That was exactly what I was looking for. So if I was only doing lets say high schools.....would I still need the 2nd one? I have the splitter on another site. I love the mod, but I don't want to pay another 150 for it. The site I'm doing is probably going to be a free site.