Because it would be better for the university to talk to and then exit misbehaving students from the school rather than throwing them to the legal system. Also you probably misunderstood what sending a message like this to the dean would accomplish.

These are adults, not minors. They have the rights of adults and are expected to behave like adults, and they also receive the consequences of adults. Being the members of a 40k/semester institute, whether that is a university or a country club, should not excuse you from your criminal behavior.

I think my solution is more parsimonious, and obviously, if the dean doesn't respond you just move on to the police.

But when someone commits a crime, we're not interested in being more parsimonious.

We're interested in achieving justice. Justice which is defined by our democratically determined court system.

Why do you think being parsimonious is a better objective than being just?

If someone is a member of the local golf club, should the golf club be called to met out punishment if the member swindles some pensioners out of their savings?

I'm not sure why the college would even propose such an arrangement. Do they actually want to be held accountable regarding their response to students who break the law, particularly if it is ohff campus? Do they want to deal with lawsuits from those who are shown the door? (In this case, it may have been cheaper but it sounds like it has more to do with the college administration stepping in when they should have simply told the affected students to legal aid.)

The legal system is far from perfect, but it is often better than the alternative.