Restricted gifts exist, but it's wrong to state categorically that the existence of restricted gifts precludes spending any endowment income on tuition. GP is also simplistic - not all the endowment income is available to cover operating expenses - but is directionally right. Lots of scholarships and the like offered by schools are transfers from the endowment to the operating budget mediated through a 'lower' tuition bill for the student. A relevant number to look at is the average income per student (money + loan proceeds) to the school - usually that's much, much less than the stated cost of attending.