It was the progressive push of theoretically neutral institutions taking stands on moral politics. People who were fine with universities being staffed with liberals, but neutral in practice, realized their tax dollars were subsidizing institutions that were actively taking a side in national politics.
For example, universities burned a lot of political capital, and opened themselves up to a great deal of legal liability, with aggressively pursing affirmative action policies. When you depend on public grants, it’s probably a bad idea to publicly discriminate against the racial group that comprises the majority of taxpayers.
As to what universities should have done, the answer is “just dribble.” Universities should be places that are just as eager to research effective approaches to mass deportations as all the DEI stuff they do.