Working hard!

Why does Frank tell Rita the story of the theology student?

Because he is training her to give correct answers to pass the university examination in literature and not the kind of answer given by the theology student who failed the exam, that is to say a short though clever one. Exam questions are expected to be well developed. So, she should give arguments as well as her reasons supporting them.
Besides, Frank wants her to develop her ideas about the book he selected for her to read so as to know how much she has understood it and evaluate her work accordingly.