It seems obvious: Students come in, and students go out. The type of students who enter your university are measured on lots of things, like test scores, GPA, ethnicity, and parental income, to name just a few. Universities are measured too, on lots of those same things, as well as others, including the graduation rate. Lots of people think the graduation rate is a function of what the university does or does not do, and in some sense, of course, they are correct: If you don't care about your students, or their progress, or you're not challenging their minds, they may leave.
But in another sense, it's also possible to think of outputs as a function of inputs. It's been suggested before by Malcolm Gladwell, for instance, that we often confuse selection effects with treatment effects: