This is true. The University of Illinois' archives confirm that bar owners began this tradition of Unofficial.
The article "Unofficial St. Patrick’s Day: The Official Story" states, "Traditionally, St. Patrick’s Day (March 17) is celebrated by sociable young adult Americans with a visit to a local pub or tavern. However, in March 1995, the 17th fell during the University of Illinois Spring Break...Not content to let the popular celebration slip away from them, local businesses organized an alternative event: the 'Shamrock Stagger.'"
This "Shamrock Stagger" was the beginning of what we now know as Unofficial. There is unclear evidence regarding the claim of the title Unofficial taking over due to the adminstration.
The University Archives state, "Although no record of correspondence (official or unofficial) between the University and the event’s sponsors has yet been discovered in the University Archives, some changes may have been suggested by concerned parties, because the following year’s pre-Spring Break promotion was smaller and advertised slightly differently. Drink specials...before Spring Break 1996...were advertised under the banner of “Unofficial St. Patrick’s Day” for the first time."
Essentially, there is strong evidence showing that local bar owners were responsible for the creation for what has become Unofficial today. It is unclear whether the change in title was due to pressure from administration, though it would make sense.
https://archives.library.illinois.edu/2014/03/06/unofficial/