I don't know if this is accurate, but reading between the tea leaves it seems the commitment to diversity compromised their ability to signal their student quality. Their values are certainly laudable, but perhaps unprofitable. Maybe they would have been better off as a non-profit? It seems like rich and famous people would love to throw money to this initiative as a non-profit.
How diverse was charging $10k/head in New York City in the first place? Are we just talking about racial diversity? Seems like an awfully strange hill to die on.