I don't understand the whole "violation of free speech" thing. GVSU gives each new student a copy of the student code, and each student signs a contract stating they understand and WILL ABIDE by the student code. If they don't agree with it, other arraingements are made regarding the part in questions, but that usually doesn't happen. So, these guys VOLUNTARILY signed a CONTRACT saying they would abide by the code. The code says that no student may openly affiliate him or herself with a student life organization that has been expelled from the University. I also don't get why GVSU being a state school matters. State schools aren't allowed to have rules?
Since TKE was EXPELLED, the former members are not allowed to OPENLY affiliate themselves - and wearing letters would be openly affiliating themselves. It's different if a national organization simply pulled a charter (which TKE did by the way). But TKE at GVSU was expelled. And the members fully knew and understood what that meant. And they signed contracts stating that they would abide by the code, and if they didn't the understood the penalty was anything upto and including expulsion. I would be surprised however, if the University simply expelled the students. They would probably get a warning, or maybe Student Life probation the first time around.
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