It seems a bit petulant to question an institutional IT policy using reference to an article that's apparently over 10 years old.

From the article (emphasis mine):
"I tested a beta of PGP disk version 1 for Microsoft Corp. Windows95 version 1 in Network Computing's University of Wisconsin lab, installing it on an AMD K6 200-MHz computer with 9 GB of Ultra DMA EIDE drives and 64 MB of SDRAM memory.

As to why full-disk encryption might be required, many states now have data-loss notification laws that require you notify anyone that might be affected unless the drive is completely encrypted. This is the case in my state, though my institution only recommends full-disk encryption on laptops or very high-risk data. The best option to keep sensitive data safe is to keep it on a protected file server in a physically secure, monitored location (i.e. campus data center) rather than on a random local computer in someone's lab; however, this doesn't always work for high-performance analysis. And there's also the "I want my data in my lab so I can hug the server" mindset to deal with in some situations.

Of course, my perspective may be a bit skewed. As a technical policy enforcer at a higher-ed institution, I'm fairly used to hearing a myriad of excuses for why policies, even those based on specific state or federal laws, shouldn't apply to someone's particular academic research context. On average, I've found that faculty arguments against IT policies are as creative and insubstantial as the excuses that their students give for late homework.