The wheel turns: it used to be programming competitions, now it's hackathons. What will be the next fad offering for glory and jobs that isn't doing the grind work of hitting the books?
The people who do well at hackathons and programming competitions are often excellent students. And extra-curricular activities as a way of learning more and improving yourself are generally considered good for students, right? That's one reason universities support programming competitions, hackathons, CS clubs, etc. I'd go so far as to say the best students are the ones who love their subject so much they do it in their spare time too.
Programming competitions actually require deep algorithmic knowledge and lots of training