Diane Dietz has the very informative story here. As the article explains, the main effect of this is to encourage 4 year graduation, because after 4 years the tuition bumps up by the full amount of the past 4 years of increases. On-time graduation rates are heavily weighted in the US News rankings (Which were just announced, UO rose from 106 to 103.) On the other hand tuition is a small part of the cost of a fifth year of college, particularly for in-state students.
At schools where 4 year guarantees are optional the take-up rates are low. Still, maybe it’s a useful marketing ploy for admissions, particularly if it’s optional.