You're assuming that the return on investing in the students, in whatever form, would be less than the endowment returns. The endowment money doesn't come from

You're assuming that the return on investing in the students, in whatever form, would be less than the endowment returns. The endowment money doesn't come from nothing, and, frankly, the larger your endowment gets, the more likely you are going to just revert to the standard market return, and the more beneficial it would be to invest in your students. It's not the cut and dry issue you seem to be implying.