They're a school that openly discriminates and tells their students not to engage in same sex relationships. This company is in the wrong. The school also is in the wrong. This applicant is about the only person who did nothing wrong here, except perhaps choose a school with a poor reputation.
The company is definitely wrong, you're right about that. I had never heard of this school before but I'm getting the impression that it's akin to Bob Jones University in S. Carolina which leaves me inclined to say a pox on both their houses.