It's a student project with a ToS that's basically "don't use this for anything that could get us in trouble." I don't find that particularly unreasonable especially when honor codes at schools are usually stricter than "whatever is legal is allowed."

I know it's programmer-brain to naturally probe the edges of things but at the same time as adults we're expected to understand and navigate fuzzy concepts like inappropriate behavior without having to have it spelled out like you do with young kids.