Depending on how many students you have and how many graders, it may be a choice of that or arbitrary "if I can't read your handwriting, you get a 0" requirements.

As a separate note, some people think that classes should teach more than just the narrow subject material, and a knowledge of LaTeX is somewhat useful for someone who plans to actually publish CS research.

Typesetting in LaTeX is a pretty common at MIT - for example, all majors have a technical communication requirement, and most courses that satisfy that requirement stipulate that problem sets be handed in in TeX. It's also not that difficult - TeX is easy to learn - and a helpful thing to be able to do if you plan to publish research.