College Radio question - Stay Internet or reach for that FM frequency?

Calling all community/college radio buffs to thread to help me sort this out.

I'm the engineer for a student-run radio station with 50 years of history, from public address through AM carrier current to FM cable and finally to Internet. We're listed in iTunes, do dynamite stuff on a shoestring budget, and do it without any professional supervision, aside from my own recent engineering advice - literally, half the station staff aren't old enough to drink.

The FCC is about to open a new round of non-commercial license, with a brief application window in October. With the help of a community radio project, we've identified a potential frequency and tower site that would just barely reach the college town, as well as encompassing some 100,000 assorted agricultural communities around.

Question: should the station heavily alter its culture and goals, abandon its call letters (they're not FCC legal), beg for more money than would probably ever be granted from the student government, and reach for that FM frequency at a huge cost (3X the yearly budget initially, plus a probably need to double the yearly budget to keep it going)? The community is already served by an eclectic community radio station AND an NPR affiliate station, both of which compete for local underwriting and fundraising $$$ yearly.

If I sound skeptical, it's because I'm looking into my crystal ball and seeing pervasive WiFi and a target demographic (high school and college kids) who are very digital savvy. Listenership is on the rise, and that's an easily tracked and proven number that helps us prove bang:buck ratio when asking for funding.

Thoughts, FM radio and Internet broadcasters? I know there's a bunch of y'all on here....