Like most top universities Rice has a large endowment. It's upwards of $5 billion in their case. If we take a sub market interest rate of 5% that's $250 million a year. Their entire undergrad body is 4k. That's $62,500 per student per year on a conservative return rate. No top universities actually need tuition anymore, but even top universities are increasingly being run as businesses with growth in 'revenue' seen as a positive in and of itself, necessity aside.
And in this case, they'll likely see major returns on it anyhow. Come donation time, I expect those graduates who were able to find a better place in life thanks to a voluntarily free education are going to be quite quick to open their wallets especially knowing that those donations will in turn go to productively helping the next generation of graduates going through the same cycle.