At the university I work at, this question has also been brought up. In a time when university budgets are getting tighter, IT directors always want to cut costs, and outsourcing email seems to be a hot topic. However, there are some serious considerations:
1. FERPA: Outsourcing email opens up the university to all kinds of possible litigation in regards to the federal FERPA regs. How is this addressed?
2. LEA Compliance: Along a similar line, there are time when an institution is required to produce email to law enforcement. How is this handled, what is the process, how long does it take, and what safeguards are in place to protect the students privacy? These are valid questions that, from a monetary standpoint, can cost the institution much more than they would save by outsourcing if not handled correctly. And that would be from a single instance - any sizable institution will have this situation occur multiple times per school year.
3. Security: As we have seen with the recent scandle with Gov. Palin, it is not very hard to crack an email account - Within an institution, attempts to access the account can be monitored, even limited to specific addresses if need be. If the university is doing any kind of research, outsourcing could open up the institution to IP theft not only from other institutions, but from foreign agencies... Just one breach could end up costing the institution millions in research grants. So, the question to ask would be how would this be addressed?
4. User support: At the institution where I work, our help desk staff provides support 24X7 - when there is a problem, how accessible is the companies' help, and how is that support billed??? Is there a phone number that can be called for support?
5. Along with the user support, how does the company handle user education? Yes, it is easy and intuitive for users to use gmail, yahoo, etc... but do these companies do any kind of proactive user education (such as preventing them from replying to known phishing sites...)??? At the institution I am at, we proactively try to handle spammers, phishing, etc... to protect our users (and the university).
These are just things off the top of my head... I am sure I can come up with much, much more of an argument to keep university email inhouse (this doesn't even address future possibilities such as integrated messaging - i.e. tying voicemail to email, etc....)
I must admit that I am biased, however... I am the email administrator at a major university (and I *LIKE* my job ;-) )