Frankly, I'm surprised it would be allowed in the first place.
I don't think it's uncommon, but, should it be allowed? Most private employers banned alcohol on premises some years back because of the risk of legal liability. Statutes vary by state, but in many, if an employee consumes alcohol on premises, and then has an accident on the way home, the employer may be held liable for damages that result.
In this case you have other reasons, too. Since you are dealing with minors, it sets a bad example, particularly when you tell them not to go out drinking. Also, universities are often alcohol-free zones.