Answer is simple. It is usually because of a change in leadership to purposefully move away from the schools’ roots and biblical convictions. These schools are relaxing the rules, allowing the students to be sloppy in dress and manners, and seeking to change everything rather than improve. Why would Christian parents want to send their children to a Christian school that is Christian in name only and is also so expensive?
If a Bible school or college wants to make a difference in education for God’s glory, it must have godly faculty members who will love and train students in life (discipline) and ministry. The purpose of rules is to help students mature in life and service. Don't ask students what they want, but be a school that they will want to attend, and their parents and church will want to send them. Don't rely on the government to pay the bills, but trust God for finances and keep the tuition low.