Who in this discussion is pushing for new laws? Isn't the original document cited a reference to existing laws? There's some room for dispute, for sure, in what is perceived to meet those existing laws in a way that coincides with the college's stated policies, but I did not see anything there that suggested that more laws were needed.
And although it ought not to have to be stated again and again, while one might well opine that "being recognized for your biological sex is soooo hurtful" in the world at large, (with or without the snarky subtext) it is entirely different, in this case. In this case, the college has made public an explicit policy regarding transgender students, and students who have applied and been accepted have presumably done so knowing this, and have the right to expect that the school's explicit policy of accepting those students in their chosen gender representation will be followed. That goes for applicants who are transgendered and those who are not. For that policy to be violated is indeed "soooo" hurtful, not only to the students who should expect the school to honor its own principles, but to the school itself, if those who run it take their own ideas seriously. And that's the case even if you or anyone else thinks they're wrong to do so, or that transgender people are icky, sinful, wrong, deserving of ridicule, or anything else.
Though I would also, while at it, remind some that "being recognized for one's biological sex" is not the same as purposely misgendering them, even if in some instances it overlaps when a transgendered person prefers to conceal or disavow their original sex. Observing that a thing has occurred may at times be considered impolite or intrusive, but it is substantively different from refusing to acknowledge it at all.