No, I think it makes sense. What exactly is the problem?
Maybe if you believe that all Iranian students will work for the government to make WMDs, sure it makes sense in that twisted world.
It's completely unreasonable and arbitrary discrimination based on nationality, motivated by political paranoia that Iran is trying to build a nuclear weapon (which, by the way, is most likely not their goal).
Hopefully it gets struck down or reversed, because this is pretty stupid.
It's not arbitrary and we do discriminate against certain nations. We don't sell Iran weapons. We don't hire Iranian nationals to work at Lockheed Martin. It's part of our sanctions regime for Iran and it makes sense to guard our technology.
I think from the University's perspective, they want to protect themselves. They don't want an Iranian graduate students even accidentally doing defense related research. That's illegal and they could face fines and jail time if it does.