It's a top tier med school in NYC with free tuition. Regardless of what people think about it, it will attract whichever students the administration wants to bring in with very few exceptions. People might think it's "malignant," and I might still think twice about doing residency training there (though really that's got more to do with the cost of housing in NYC), but absolutely no one is going to look down on NYU graduates, which is a far more relevant metric.
I think NYU is indicative of what we'll see in the future, especially since reimbursement is clearly in the crosshairs and physician labor organization is so poor. Medicine will become far less attractive as a career path, but the top places will offer hefty scholarships and we'll simply accept that lower tier students will struggle with both loans and employment while top tier students will get scholarships. It will be a lot like law, except unlike law there won't be Big Med firms that start associates at $200K, pay income partners $1M+, and pay equity partners $3M+. Unlike law residency will continue to pay like garbage, and probably we'll wind up with an MD being somewhat like a PhD. Top students will either go into medicine in academics and chase prestige for little money, or they'll leave medicine and be heavily recruited for consulting firms or tech or other sectors that can still make money.
So what does this mean for NYU? It means NYU is ahead of the curve, but likely in 10-20 years nearly every top tier med school will make a similar effort to maintain competitiveness by either waiving tuition or offering hefty scholarships to many students, much like top law schools today. Probably we will see a regression to the mean for NYU in both decreased NIH funding and perceived prestige, but it will still be a top tier med school in NYC.