I think when considering proposals such as this one, it's important to first consider what the purpose of university is. To many people, universities are just another kind of school. To others, the research mission comes first, and teaching students is a second order effect. This is codified in the mission statements of various universities -- for instance Caltech's: "The mission of the California Institute of Technology is to expand human knowledge and benefit society through research integrated with education."

This proposal would tie the existence of a program and its associated research directly to the employability of the (mostly undergraduate?) students. Presumably entire disciplines would be slaughtered overnight, and not just the ones that right wing commentators like to go on about. You could kiss goodbye to essentially all arts education, and most niche sciences like Archaeology. You'd then massively shift to vocational degrees like engineering, law and medicine.

I think that one issue that has been identified is that the federal government is underwriting a whole bunch of student loans that will likely never be paid, and universities are not incentivised at all to keep prices down. Employability is somewhat orthogonal to that.

You also have to deal with the millions of people who already have these loans, who undeniably need bailing out at least somewhat.