Overhead is basically rent. You might think that a university rolling in with donations and names on buildings wouldn't need to charge rent but: 1. Nobody dona

Overhead is basically rent. You might think that a university rolling in with donations and names on buildings wouldn't need to charge rent but: 1. Nobody donates for upkeep. Not a huge market for the "jdiez17 memorial janitorial closet" if you know what i mean. 2. Endowment spending is typically limited to 4 percent, and often less. And often restricted in what it can be spent on. Administrative overhead basically allows the university to convert its fixed assets into flexible spending on their basic needs that donations won't cover. Also: overhead is limited by law, unless your university has a grandfathered exception.