not sure of this institution's reasoning, but Typically speaking the prohibition of routers in dorms is related to any combination of the following

increased RF noise and co-chanel interference with the enterprise wifi deployment on campus from the addition of 100's of wireless routers in super density (a router per student per room in a dorm, it added up quickly- this is problem what they were referring to when saying making the signal weaker)

unauthorized extension of the network, uncontrolled vector into the network.

often times the services available on the wired network are not extended to the wireless segment, but if you throw up an wireless router you are now extending those services to your wireless network.

hiding a SSID will not help you, and many networks on college campus will detect the traffic on the port from a router, and auto kill the wired port.

additionally a misconfigured counter can cause looping issues depending on how the network is designed and if/ how RSTP is implemented

from a security standpoint throwing your own router up can obfuscate a malicious device's MAC, and make it more challenging to locate or blacklist a said device.