They don’t give the money back when you’re expelled. They made their dime off the idiots.
The school still loses on enrollment next year (or next semester or however it works contractually).
I’m not all up-to-date on academic fuckery but I seem to remember that universities tend to do a lot of fucky shit to keep attendance rates up as it matters for a lot of metrics. Losing a quarter of a class at once is probably not something that looks good on anyone’s KPIs (and god knows the real world only cares about useless KPIs).