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I've been in academia for 25+ years, and am currently a professor at a university. Universities and the DOD are inextricably tied together, and the banned universities were providing quality value to the DOD. Some things to think about.

1. Every top level officer in the military has a graduate degree. You basically need to have a Masters, and preferably a PhD, to be a general or admiral these days. I can't tell you how many active duty military I've seen getting masters and PhD's, both from US and foreign military. The US Navy has a top-notch graduate school, the Naval Postgraduate School at Monterey. It's really good. Prior to Hegseth, US military doctrine was that highly educated senior officers with advanced degrees was a good thing. Hegseth hasen't completely renounced that position, but have taken some of the best places to get those degrees off the board for no practical reason.

2. The most senior officers have to know much more than just strategy, tactics, and logistics. The advanced degrees I mentioned in the previous paragraph may be about "military science", but are often about a specific technical discipline (aerospace engineering, computer science, cybersecurity, etc). They may also be about "softer" disciplines like history and geopolitics. These people are operating at a level where their actions can have generational effects and they need to think that way. Hegseth never had to operate at that level when active duty, so he doesn't see the value of it. The best schools for both the technical skills (MIT) and the geopolitical skills (Harvard, Yale) are now off limits. Yes, there are other very good schools, but this is incredibly self-defeating.

3. All of these schools are providing junior level officers through their ROTC programs, managed by active duty military. Are those programs closing? It seems odd to shut down those pipelines. The active duty military can be re-assigned, but what of the students partway through the programs? Are they just screwed? The fact that these schools have been providing ROTC graduates for over 100 years and haven't yet made the military "woke" pretty much puts the lie to the claim that they are somehow reducing military effectiveness

4. Are the research program affected? Every one of the advanced technologies the right-wing loves to show off were birthed in a university research lab. Yes, we have amazing technology, but only because there was a conscious effort for decades to team government-academia-industry to produce it. The government provided the funding, academia provided the advanced research, and industry produced the resulting products for the government to use. Trump is already running a protection racket on these schools for government research funding. Will Hegseth extend this to DOD research funding? Why wouldn't you want MIT to work on your technically advance weaponry? As a minimum, it is again ignoring the value that these universities provide to the DOD, for no practical reason.

In short - there are multiple aspects as to how this move reduces US capability against actual, real-world opponents all in the name of opposing an imaginary enemy called "woke."