Endowment money is frequently earmarked for a specific spend. The size of the endowment is much less relevant than the designation specified by the donor. For that reason Michigan, in the last two capital campaigns, has tried to ensure that earmarks are pointed toward aid. While there is a degree of fungibility, money spent out of endowment for a particular bit of research may free up other institutional dollars, the fact remains that there are endowment constraints sufficient to make a directed spend difficult without specific underlying donor intent.
Now let’s look at order of magnitude using approximate numbers. The out of state cohort (international students might be mixed into my number) is roughly 40%28,000 students, or roughly (very) 11,000 students. Giving each such student a $20,000 scholarship would require $220,000,000 million in income. At a 5% spend rate (aggressive in light of the current spend rate), that would require $220MM20, or roughly, very, $4,500,000,000 dollars in endowment corpus. At present, the endowment corpus for aid is less than half that amount and is spread over more like 50,000 students rather than 10,000 to 12,000 students. Those are very crude figures but offer a flavor as to the sort of money you are talking about. Endowment at the $20,000 level for all 50,000 students would run roughly $20,000,000,000…or twice the current endowment corpus, and would crowd out all earmarked spending.