I'm hearing stories that this was actually NOT a financial decision, but one motivated by politics, in particular some at the top who were tired of the "liberal" element that KTXT represented. I don't think this story is quite over, there appears to be a lot of outrage.
True that 88.1 has been a slacker haven to varying degrees over the years, but that's what college radio is, and what makes it such an integral part of the college experience. KTXT was really awesome in the days of "College Rock", before Alternative became a commercial format. I got my first dose of Soundgarden, the Cure, the Pixies, the Smiths, and gosh knows what else from that station. I really loved listening to (and frequently laughing at) what they would be playing when I drove into town, most recently just this last Thanksgiving. Lubbock has never been a town with much kindness for young folks or "weirdoes", which is even more true now that KTXT is off the air. Lubbock didn't need to become even more bleak than it already is.
Really sad, but again I don't think this is over yet. The "Save KTXT" group on Facebook is already pushing 3,000.