I don't think that's the whole story. Not to contradict what you've heard, as it is rumor, but I think it's important for those interested in the program to consider this.
The new school must have an all right reputation as its MA program seems to have decent placement, e.g., there are maybe 2-3 students in the U Chicago doctorate program coming from the new school. Similarly, the chair of the BU program received a degree from the new school. The terrible funding is infamous, but it's possible to get full rides, as a few students from my SLAC have done. The professors I've encountered that hold degrees from the new school have been great as well. I'm by no means a new school defender, I'm just pointing out some positive impressions I've had. With that said, I will apply to the program come next year, then empirical evidence, Husserl archives, etc. Hope this helps those considering the program!