Investigate sources of funding. For example, at many universities, funding is available through the Student Government, the Office of Student Activities, or the President's Office. Submit a budget to the Student Government and write a letter to the President.
Participation in the Pan-Am need not be expensive. For example, a team could drive in one car or van. With four people per room, the hotel cost is only approximately $22/person per night. By registering with the State of Maryland as a tax-exempt organization, all state hotel taxes can be avoided.
There are several ways to select a team. At UMBC, we hold a selection tournament early in the fall semester. Our tournament, the UMBC Championship, is open only to UMBC students. To qualify for our team, students must play in this 5-round Swiss system. We find this method is the fairest procedure (ratings can be unreliable), and we find it helpful to require students to demonstrate a commitment to the team by playing in the tournament. Our tournament also determines the university champion. Other schools may prefer to select the team solely by USCF ratings, through a double round-robin playoff, or by the judgement of a coach.