The bishop can pull the plug in one way, by declaring that a college is not Catholic. That could be a serious matter if he makes his decision known among the Catholic population. That was the case a few years ago for example with Marist College in New York State. (This college then agreed with satisfaction that it is no longer Catholic.)
Catholic parents with college age children should carefully investigate any self-claimed Catholic university they are considering for their children. I have worked for 35 years at one of them, as a librarian, and I have seem many troublesome things. Five years or so ago a gay-approving university organization was institued, meeting at the campus ministry. One of the chief founders is a liberal nun who was made priesident of the university several years after this. Most of the professors are not Catholic and they fight like wild men at any chance of the university’s former Catholic identity being reasserted, something I have watched on several occasions with horror. In a self study of this and a group of other historical Catholic schools, the study itself showed that the students from the time there are freshmen to the time they are seniors are statistically far more often approving of one night stands between unmarried couples, gay marriage, and other dissenting views. This study compared what happened with students at these “Catholic” Catholic schools with what happened with students at state universities, and such a decline in student morals among the Catholic students did not occur at the statet universities. That is, these Catholic" schools destoyed the morals of many of the Catholic students there.
Such secularization is no doubt the reason the head of the Jesuit order said several years ago that most of the Jesuit universities in the United States seem permanently lost to the Church.
There are some good Catholic colleges, and not doubt someone posting here will identify them. But all the same the U.S. bishops are looking into the matter with very good reason. I hope that they can do much in this matter, though from what I have experienced, they will have a great struggle to deal with such troublesome colleges.