Of course they are. They have a right to demand a certain grade on admissions tests, IQ tests, dress code, and a GPA minimum, etc.
Expelling a student for what the parent does for a living is extreme. The exception here is if the school informed the parent of what was expected of her on the admissions or other document.
Acutally if offspring of any occupation should be excluded it should be layers, not strippers. At least with strippers 'WHAT YOU SEE IS WHAT YOU GET'.