From the article it sounds like it happened in the course of a fight that the other guy started; the grand jury may have just viewed it as self-defense.
Maybe? Self-defense doesn't usually extend to "He shoved me while in a public space with other people around so I killed him." One has to believe that there were indeed extenuating circumstances but it's not really clear from the article what they were.
I'm extrapolating a bit from the article, but it sounds like he was walking past the frat house on the street when Gutzeit left the house approached him on the street and attacked him.
If you are minding your own business walking down the street and someone approaches you to physically attack you, especially with 10-20 fraternity brother behind them ready to jump in, it doesn't seem unreasonable to me to use a knife in self defense. That is a life threatening situation, or at least a risk of grievous bodily harm situation.
The fact that he wasn't indicted makes it hard for me to believe the situation occurred otherwise. It seems to me like the Ny Mag article may have significantly misrepresented the event.