Have you considered Sharepoint in the role of a VLE?  I know that some universities are already doing this either with bespoke development, using the SharePoint Learning Kit (SLK) from www.codeplex.com/slk or just out of the box functionality.  I've been working with a partner, eLearningforce, which has created SharePointLMS.  There's an excellent blog article here which talks about the fact that SharePoint might be the last server you'll ever buy : http://higherinnovation.net/blogengine/post/2008/03/Microsoft-Office-SharePoint-Server-May-Be-The-Last-Server-Youll-Ever-Need-For-Business-and-Learning.aspx
Take a look at the table comparing functionality with other VLE products on the market.  The great thing about using Sharepoint as a VLE is that pretty much every university, in the UK at least, is licensed for staff already so this becomes a matter of getting more functionality and value out of existing and familiar technology.  I've often been asked to help a university write a business case for Sharepoint.  A starting point could be to look at how much is currently spent on funding the licensing and/or maintainance of the institutional VLE and then look at the compartitive costs of SharePoint.