University is a different world. It will ask you whether you want to have SP work over there, too, like it asks for every world you travel to the first time. Nothing happens to your homeworld and its settings while you are there (all other worlds won't get simulated and are completely frozen in time). All settings are stored in the world files (the *.nhd files you find in your savegame folder).
Turning on SP in the university world has its ups and downs. It helps with having everything work correctly when you return for a second time. On the flip side, students will move into all the empty houses (tip: take the refrigerators out of the houses you want to reserve). Also, make sure to switch the setting under General Options> Options: Household > Manage Homeless to "false", or all the unique pre-made students the game has in its files will get deleted and you will see nothing but pudding faces in the future.
