I think the people who make this argument strongly want to destroy the title ix infrastructure, the student debt infrastructure, and the indirect control of the purse strings on things like National Endowments which afaik go only to individuals and institutions compliant with Department of Ed. Afaik the argument is that doing these would wholly reshape student tuition moneys and hiring/promotion practices. Sure, direct federal moneys make up a minority of funds across universities, but department of ed policy shapes the student body, hiring, and research itineraries through directly and indirectly attaching prerequisites to sources of cash, and afaik that includes indirect sources of money like subsidized or indebted tuition moneys and funds from taxpayers distributed through other agencies.

I personally get apoplectic about state-level credentialing, but that's another story.