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Media blowback - yes. However, academia has a long memory by Father Nieuwland
And I think concerns about the opinions of Aspirational Peer Universities impacted the decision (as well as the core issue of discovery of academic fraud within a University).
Plus, if people at ND felt he lied to them or knowingly dis not reveal the truth to them, it would have been tough to keep a new employee.
I would have looked for a way to keep him (some sort of penance like finish the number of credits he needed to get that masters degree), but I can understand ND choosing to cut bait while still disagreeing with that conclusion.