It's definitely more challenging having your sim stay on campus. If your sim lives off-campus, they just disappear off the lot to go to class (like going to work) and reappear afterwards. So, unless you cancel the "Go To Class" interaction, or something interferes with it, they are never late and don't lose academic performance that way. Also, they can get proper meals at home, sleep in a comfortable bed, socialise with family, and do their university tasks pretty much without interruption.
I started off by having my two main sims (husband and wife) study from home - the wife at U-Brite and the hubby at Foxbury. In the beginning they lived in Gibb's Hill and were mostly getting term GPAs of A+ without too much effort on my part. But I was also playing the university aspiration (I forget what it's called) and I wanted my sims to be able to attend guest lectures and tutor students more easily, so I converted one of the student housing lots on the U-Brite campus into a residential lot and moved them there. Then the game became more difficult. My sim hubby was okay, because he just disappeared for his classes as usual, but the wife would run or cycle to every class, which took ages, so she was often late and her performance suffered. I had to really micro-manage her to get her through her degree, but in the end both of them did well.
Then I wanted to go the whole hog, so I enrolled a different sim in Foxbury and had her live in a dorm. She is about halfway through her degree now and I am finding it a lot more challenging than I did with both of the other two put together. Even though she lives right on campus, she is often late for class, because it takes so long to get there. She doesn't have the AI to choose the quickest route, as opposed to the most direct one (which involves going up and down all those steps). Plus, within a couple of days of the start of term, she has an unhappy moodlet from the unhealthy food that is the only thing she has time to eat. She never seems to have enough time to go out and get a decent meal, as well as keep up with her studies. And lastly - and this is a mystery to me - she has difficulty satisfying her social needs, so that makes her unhappy too. I really don't understand this, because she is friendly and outgoing and spends a lot of time interacting with her dorm-mates. It just doesn't seem to satisfy her. I have never had her participate in any of the events on campus, because - again - she hasn't the time to do anything other than keep up with her studies and try to keep her needs reasonably well satisfied. My problem, of course, is that I want her to do well. If I didn't care about her results, then she - and I - could probably have a lot more fun. As it is, I am finding it quite a grind. Next time I am going to try it with a sim I don't care about so much!
And I think that's it, in a nutshell. If you just want your sims to get good results, then off-campus living makes it easier. If you want more of a challenge, then dorm living is the best option. If you are trying to fulfil the aspiration as well as get a degree, then you might like to consider a middle ground, like converting an on-campus lot to private residential use. That way you have the benefits of home life, while still being close to events on campus.
