The military sponsors departments of civilian universities there[1], or even whole universities, rather than individual research grants like we do here.
"Military Schools" is misleading. These 5,000 kids aren't out of Chinese West Point. If they were, China probably wouldn't let them leave.
The reporting indicates it's about the schools they attended, not the students' scholarship conditions.
We haven't seen the list of schools, but from what I can see it'd be more like revoking the visa of someone who attended Vanderbilt, because Vanderbilt has a partnership with Oak Ridge National Labs doing nuclear simulations.
I agree that the idea that these are necessarily individuals with military associations is incorrect, but I also feel this is a false analogy because of how different the nature of a US Gov. association with a university is compared with a Chinese Gov. association with a university.
All analogies across such different systems will be inexact, of course.
The headline about "Military Schools" is still completely misleading, from the paper who brought you "Saddam has WMD". Both stories fed to them, of course, by our security state.