They also emailed and temporarily disconnected all students who were running servers vulnerable to heartbleed, so presumably they do some form of more intensive inspection and logging as well.
And if they were very concerned with exposure of sensitive data, they wouldn't be logging it.
That's not the same thing as "monitoring for illegal/commercial/malware activity".
Full packet capture for how much disk space you want to allocate to it (many like 48 hours) then longer term storage of flow records, DNS and http metadata, etc.
The majority of the use cases are watching the internal uses of the network as well - not generally being used to detect intruders.
My boss barely understood what I was doing, his superiors certainly didn't know anything about it. We were not part of what would be considered the university IT department either -- we were just some random organization within the university. Who knows how many different people on hops above us were doing the same thing. And I was capturing the full traffic (not metadata) of people who would normally take even extra offense at this sort of thing going on. Not because the traffic contained SSNs or credit card details or something like that, but because the traffic was sensitive in a more private, personal way (I can't go into the particular details any more).
Unfortunately, this brief story doesn't have a juicy ending. I didn't do anything nefarious with the data. I didn't use it to spy on anyone. I simply used it to watch out for attacks against services on our network -- I thought I was doing something positive for the users of our services. But reading the parent post made me pause for a moment and consider that all these things I'm reading about and taking issue with in the news today (the NSA, eavesdropping, etc), that I did something similar, albeit on a much, much, smaller scale myself, many years ago when I was younger and more naive.
This is anecdotal of course but I can't imagine what were were doing back then was unique or isolated. It's trivial.