The Trump administration has quietly abandoned the poisonous deal it tried to foist on American universities. Under its so-called Compact for Academic Excellence in Higher Education, the administration offered select universities privileged access to federal grants if they agreed to conform with Donald Trump’s ideology on how they should be run.

Universities widely pilloried the proposal, demonstrating the power of a collective defense. Higher education in the United States certainly needs reform, as many university leaders and the public would acknowledge, but not according to the dictates of Trump.

Yet the administration’s withdrawal of the compact doesn’t mean that Trump has forsaken his crusade against what he sees as bastions of liberalism. Vigilance is still needed.

The compact, originally proposed last October, singled out nine universities. When only one managed to find anything positive to say about it – the University of Texas, a public university overseen by a conservative state government – the administration broadened the offer to other possible takers. But unlike Trump’s successful efforts to entice a handful of wealthy law firms to cut deals with him, universities maintained a more united front. Hardly any took up the offer.

The terms of the compact were to be interpreted by the Trump administration, making its broad language worrying. It arguably required banning preferences for historically underrepresented groups in student admissions and faculty hiring, expanding the campus presence of conservative ideas, prohibiting certain student protests, ending statements on behalf of the university or its units on most public issues, adopting the administration’s definition of gender, and limiting the number of foreign students.

Even if one accepts that liberal perspectives tend to dominate at US universities, some of these conditions arguably violated the first amendment by imposing viewpoint restrictions on government aid. That remains true even if ostensibly done to oppose viewpoint discrimination.

The financial stakes were enormous. The administration suggested that any university rejecting the compact would “forego federal benefits” – something that one law school dean described as “extortion, plain and simple”.

But joining the compact had its risks too. Universities that the justice department found to have violated its terms not only would have been barred for one or two years from further federal grants made under the compact but also would have had to pay back all money received from the federal government in any guise during the year of the purported violation.

The response was largely scathing, with university leaders proclaiming that the compact would compromise academic freedom and institutional independence. They also objected to the government awarding scientific and medical grants, which underwrite much of the US’s innovation, according to Trump’s ideology rather than merit.

Yet Trump is hardly abandoning his effort to coerce change at US universities, although the administration at least has begun to consult with their leaders. In an open letter on Monday, the education secretary, Linda McMahon, urged every university by the end of the year to post on its website “a clear public statement outlining its commitment to implementing reforms that will help restore public trust in higher education”. That should include, she says, such topics as admissions, free speech, intellectual pluralism, academic standards and “prioritizing American interests”.

She mentioned no consequences for non-compliance, but this vindictive administration could readily use any information published to target its next round of victims. And given its whole-of-government approach, it might retaliate in a legion of ways.

To date, it has threatened to prioritize student visas for universities that keep foreign enrollment below 15%. It has made unsubstantiated findings of supposed pro-minority discrimination in admissions. It has threatened agencies that accredit higher-education institutions. It has sought draconian fines or financial commitments – $500m from Harvard, $1bn from UCLA. It has significantly increased federal tax on the largest endowments. And it has continued to freeze federal grants.

The greatest threat remains the administration’s potential manipulation of new federal grants – a lifeline for many universities. The funds emerge from a black box that can easily be manipulated with little opportunity for redress.

Despite the broad rejection of the compact, there have been considerable differences among universities on how to respond to Trump’s blackmail. When the administration threatened to cut billions of dollars in federal aid for Harvard, it successfully sued. Yale, by contrast, confronted with a justice department letter claiming on the basis of untested data that it had discriminated against Asians and whites in its medical school admissions, quickly offered to negotiate.

Appeasing the fickle Trump is no guarantee of relief. Brown negotiated an agreement that is widely viewed as favorable, but that didn’t stop Trump from including Brown in the initial group of universities offered the dangerous compact. Unlike Brown’s deal, the compact included no affirmation of academic freedom.

Nor does a more aggressive approach leave a university untainted. While Harvard sued, it also unsuccessfully sought to placate the administration with various concessions – including dismissing the heads of a Middle East studies center and adopting a controversial definition of antisemitism that has become a virtual invitation to censor criticism of Israel.

The overall resistance to Trump’s compact has been impressive. Similar tenacity is needed to counteract his other ploys to control the academy.

The stakes extend beyond higher education. Democracy depends on not only periodic elections but also opportunities for the public to monitor and influence government. Just as the media and civic groups play essential roles, so do universities.

In addition to educating students, universities are repositories of expertise. Scholars, through their research and writing, are among those best placed to understand the intricacies of government policies and to lead the public debate about their merits.

The vitality of our universities is important to the health of our democracy. Trump’s withdrawal of his compact is a time not for complacency, but a time to bolster the collective defense of America’s universities.

• Kenneth Roth is a Guardian US columnist, a senior fellow at Yale University, and former executive director of Human Rights Watch. He is the author of Righting Wrongs: Three Decades on the Front Lines Battling Abusive Governments