Living off campus is a choice I think every student should have. Your college life should be a mixture of different social situations including group settings as well as individual settings. In college, I chose to live off-campus and still feel it was the right choice for me. I need my personal space for studying and many people I've spoken with have this same need. Though dorm rooms may provide a close-nit social network for young people just leaving the comforts provided in a parent-run home, studying is an essential part of college life. Dorm rooms are often cramped and noisy which isn't conducive to studying. Off-campus apartments provide this privacy and gives college students a more realistic idea of what life after high school and college will entail. There will be multiple bills to pay at certain times, cleaning, price-checking, no cafeteria down the road, and chances are you won't have enough money to eat at a restaurant every meal. This is a time where students should study all aspects of becoming an adult, including cooking. Shopping for groceries on a budget, planning and executing realistic yet tasty meals, as well as tidying up after dinner are great habits to become accustomed to in this transitory period. Though school can be intense, there is often plenty of time to hone other skills that you will need upon entering the working force. 
On the other hand, dorms do provide an excellent social network which can soothe the sting of leaving home for the first time. Your friends are just around the corner, or possibly, the same room. You also have to deal with arguments and negotiations over space and noise which can aid in developing responsible habits. The cafeteria down the road and the communal bathrooms can be helpful in that they provide you with more time to study and participate in the many extra-curricular activities university students should be a part of. The proximity of like-minded people will also facilitate discussion of current school topics, daily life issues, and the changes in mind and body that young adults experience. Dorms are also a place where parties are open to everyone on the hall and frequent enough to be a distraction from the responsibilities of a young adulthood. Students can learn to choose studying over socializing or lose themselves in the newfound freedoms that college life provides.
Both living situations have positive and negative aspects, but I feel the essential component of college life is the newfound choices that young adults face. They should become accustomed to deliberation upon being given a choice and learn from those decisions. If they choose the dorm life, they will have to deal with other people on a constant basis and temptations they may not have experienced before. If they choose to live off-campus, they will learn the truth of what freedom is and those responsibilities that come with it.