I agree with the school’s right to exclude who they want and govern their students’ conduct, but this student might have a breach of contract claim. He met all the requirements to graduate, and lots of non-Mormons attend and graduate.
Those non-Mormons have to abide by the Honor Code also. If this young man perpetrated a fraud of pretending to abide by the code while taking his courses, then he has no claim. The article said he voluntarily stopped attending the church in 2002. Every year member students are required to affirm they are members in good standing in the church and will abide by the code. It appears he may have misrepresented his commitment to the church since 2002 and if the coursework was completed only in 2008 or shortly before that time, then he broke the agreement.
Incidentally, his beefcake calendar of returned missionaries is to Mormons as a girlie calendar of nuns would be to Catholics. It is a slap in the face to the standards of the church and his marketing it as members baring their chests is using the church in inappropriate ways.