Students faced a ternary choice prior to the Fall semester: 1. enroll as an on-campus (and thus live in a dorm), or 2. enroll as a remote student (and thus live at home), or 3. take a leave of absence (and thus live wherever)
Only students in that second bin were subject to the requirement stay out of Providence. A cynical take on this is that Brown has always had strict residency requirements for its students, and residency fees are far above the market rate in Providence. If students could simply mark themselves as "remote" to get out of paying dorm fees, I'm sure many would.
The other key bit of context is just how poor of a job Brown did at geolocating students. Dozens of students (some international!) received baseless notices of reprimand. The most compelling theory I've seen is that these students were using Brown's VPN, and were identified as on campus via IP geolocation.
Brown's monopoly on undergraduate housing is an essential source of revenue. Brown generates twice the $/ft² in revenue as private landlords in the area, but pays only a fraction of their running costs (Brown pays no income tax on this revenue, nor property tax on its dorms). There's nothing wrong with students commuting, per se, but for a University that's come to rely on residency fees, ditching the residency requirement is no easy financial feat.
Mind you, Oxford is sparing as to who gets VPN access, so it doesn't open a hole for non-members of the university to get access to the serial's collection.
The language in the letter triggers my "the lawyers are panicking" detector more than my "you're screwing us out of a few bucks" detector.
No, if this is what they truly cared about, there wouldn’t be 3 different choices for students. All would be required to stay remote with special exemptions for those who don’t have a safe home otherwise.
That all being said, I think threatening suspension is a bit too harsh for what is probably a simple mistake for a bunch of 17-22 y/os