Through this whole thread, this is really the answer. Students don't just pay their own way. And the model isn't that universities give scholarships to PhD students. PhD students either get TAships (that are paid by the department) or RAships (paid by the professor through their research grants). If the school is losing (or at risk of losing) research grants then the first and easiest thing to go is grad students.

This isn't about administrative bloat or any of that other stuff. It's purely the model to fund grad students is being choked and this is one of the few levers programs have to adjust to it.