This house was an off-campus dwelling that the students had rented from the university. In other words, they were paying the rent, just as any other renter does. Are you suggesting that against their will AND against the law that they be forced to have a proctor?
Which planet are you from?
Like you said, El Grandioso Salseronador, the students rented the house from the university. Gee, to me, in my limited legal reasoning abilities, that looks and smells more and more like culpability salsa!
Yesterday's "in loco parentis" is today's padres locos.