"Reduce your costs", they said. "Don't worry about those expensive hardware costs", or management. "Only pay for what you need", they said.
Until everyone was hooked and the tooling was everywhere.
Even just putting the pricing for hardware/services aside, the bandwidth charges alone are quite amazing. Most have it at $80 per TB per month. That's $80 a month for a 3mbit connection. [3mbps * 3600 seconds an hour * 24 hours * 30 days ~= 1TB]. Even if you pretended it was 6mbps for double the redundancy, that's still $80 for a 6mbit connection. I understand there's more to it than just transfer amount/speed, but this is in a place where bandwidth is supposed to be cheaper, as it's "purchased" in wholesale, yet a 1GBit upload connection could transfer 330TB in a month, which would cost over $23,000 at Microsoft/Google/Amazon.
I am not saying the cloud doesn't make sense. I love me some Firebase. CDN's are game changers. And GPU's per hour is the only way some scientists/researchers can afford to do work [although it does contribute to the NVIDIA's focusing on manufacturing high price/low volume].
That said, it's not for everyone. A cheap VPS can do a lot.
Specifically for a university or an institution with a lot of cheap/free bandwidth, on-site would not only be cheaper, but also have lower latency for its campus users and more control wise.
Also, if done right, there's a possibility of teaching the students relevant real-world solutions using the knowledge gained/within the university.