THE NATION'S largest endowment, Harvard's formerly $4 billion fund, is taking a dive along with everything else in the financial world. But Harvard students needn't worry. As far as students are concerned, the endowment might as well be booming.

Students might fear a financial pinch since common sense suggests a shrinking endowment will take care of a smaller share of the University's $715 million budget. In the world of common sense, a burgeoning endowment could afford to pick up a larger share of the tab for higher education, leaving students more time to study and less obligation to work dorm crew.

But in the world of Harvard finance, the endowment could skyrocket to the moon and back, and it still wouldn't make a dent on the budget. The reason is that the endowment pays out a set rate more than it has paid out the previous year, regardless of how much it has grown in the meantime. Excess gains are reinvested, and the pot grows bigger.

THE ENDOWMENT'S set pay-out rate has increased the burden on students at a time when the load should be lightened. During the bull market of the last five years the endowment has more than doubled. Inflation has stuck at a low 4 percent.

Yet tuition increases have far outdistanced inflation, and undergraduates are paying $5400 or 50 percent more this year than they did when the bull market began.

The endowment's set pay out rate is to blame, because it bars the endowment from making contributions that reflect its outstanding performance. In 1974 the University established the pay out policy to preserve the endowment's long term growth. It has worked--since 1974 the endowment has quadrupled.

There is no doubt that Harvard's endowment has benefitted from this pay out policy. When other universities, like Yale, spent their endowment gains in the early seventies, Harvard reinvested. Now Harvard's endowment is far bigger than the funds at schools that spent more liberally. The set rate also has helped the endowment weather onslaughts of high inflation and poor market performance.

But, by relieving the endowment, the pay out limit has placed an unfair burden on students. In 1974 the endowment funded 22 percent of Harvard's expenses, while it only picked up 17.5 percent in 1986. When the endowment pays a smaller share of the budget, tuition has to make up the difference. In 1974 tuition paid for 21 percent of the University's expences and last year it paid 27 percent.

THESE INEQUITIES should have been addressed in a time of plenty. And they were, sort of. More than four years into the bull market, the University administration last fall finally decided to raise the percentage increase in the amount that the endowment shells out each year.

The enhanced contribution was too little, too late. And based on the luck of the market nowadays, it's not likely that the University will send any more increases our way.

Students have gained a lot of intangibles from Harvard's stellar investment performance. We can brag about attending the nation's richest school. We can marvel that Harvard's 100-strong team of in-house investors rivals the lineups of top Wall Street firms, or at least we could marvel until recently.

But when it comes down to paying thousand dollar tuition increases each year and bearing a greater burden of the budget, these thoughts offer little comfort. If the market drops even further, then maybe Harvard's endowment will get the sinking feeling we have each and every year when we open the mail to find the biggest term bill ever.