Square hole punches cost money. Scissors are already lying around the house. Sure, the results weren't pretty, but then pretty was not the stated goal.
This was for 5 1/4" floppies, naturally. By the time 3 1/2" was the standard, I had a job and could simply requisition them as needed.
I remember getting a few funny looks from the stores in the Electrical Engineering department when I requisitioned a few (probably at least five) boxes of 3 1/2" floppies so I could install Linux (Slackware) complete with a pretty full X11 environment (I'm pretty sure X and its apps was split over at least 12 floppies).
This was for 5 1/4" floppies, naturally. By the time 3 1/2" was the standard, I had a job and could simply requisition them as needed.