If the service is hosted by google and not your college, then no they can't read it. A few months ago my answer would have been different but it looks like google/gmail have (finally!) started forcing ssl on their sites, meaning all communication with them is encrypted. Of course google can still read your shit.
If it weren't for them using google, then they would be able to snoop your email and it wouldn't be illegal. Aside from the fact that there's probably something about that buried in your contract with them, there's the fact that it's their server, their service, and their gateway. What's more, if you have a housing contract with them (you live on campus), they can pretty much come into your room and stick their finger up your ass at any time if they want to. And they do.
This all presumes that you are USA, because I'm an Amero-centric douche.