So we should take away something that is necessary to someone helping themselves (have you tried to apply for a job or take a class without using the internet recently, it’s required), just because some people don’t care about living in squalor?

If all they are doing is “loitering” to use the internet, then they aren’t doing anything wrong. It sounds like the problem is simply the number of people and the neighbors didn’t approve. In that case, the truly win/win option is to provide greater access points to free wifi so people don’t have to congregate in one small area. This outcome only hurts people.