Is saying "No" to federal funds going to work for religious institutions?

That's one of the questions set up in this New York Times piece ("To Keep Free of Federal Reins, Wyoming Catholic College Rejects Student Aid").  A bit:

To the college’s leaders, rejecting government-backed aid was an expensive effort to defend against what they called growing government threats to religious freedoms. If you do not take the money, leaders argue, the government cannot tell you what to do.

“It allows us to practice our Catholic faith without qualifying it,” said Kevin Roberts, the college’s president, a Louisiana transplant who now wears a black cowboy hat to work in this town of 7,500. “It’s clear that this administration does not care about Catholic teaching.”

This might "work" - but, I feel sure, only for a while, only for some small institutions, and only to an extent.  The regulatory strings about which Catholic and other religious institutions might be concerned are and are going to be attached not only to student-loan funds but, increasingly, to accreditation decision, contracts, research grants, sports-conference membership (!), and the like.  I do not think, in the long run, the smaller institutions with very strong animating missions should think that they can avoid the struggle that the larger research institutions are going to have to wage.