I may have some insights as a college student, although I've admittedly never lived in dormitories or campus housing. I've only been a purely nontraditional student.
I attend a state university, and the resident rates for room and board for next year are going to be about $8000 for the next school year. This includes only the fall and spring terms. Summer costs extra.
Additionally, many colleges and universities require first-year and/or on-campus students to purchase some type of college meal plan. My university has plans with an average price of $8.86 a meal.
So, having your student live in the dormitories is going to expand your costs.
As mentioned in a comment, many dorms are closed for breaks and holidays, so the student needs to arrange to live somewhere else for that time.
Another type of availability is your student's availability to you, which will understandably be considerably less.
Many universities now have surveys that students take that help match them with room mates. Supposedly, it increases your chances of getting a room mate that is compatible with your lifestyle. Nevertheless, your student will have to adjust to living with one or more people.
This could be argued to be an advantage, though, as they will have to develop some life skills due to sharing the space.
There are also communal bathrooms, which can be less tidy than personal bathrooms. And, the nature of shared spaces, and community areas, means that the noise pollution may be higher.
A friend my wife, who goes to a different university, had a bad dorm layout last school year: You had to go through her room to get to the rest of the dorm. She had create a makeshift privacy curtain for bed time, but the curtain didn't help that the door was often noisily opened late at night when she was trying to sleep.
You also just have less space to yourself. Your student won't likely be able to bring all of their belongings with them, so they'll have to make careful choices. A very common situation in my experience is that parents end up having to buy new furniture, bedding, and dorm accessories that specifically take advantage of the smaller spaces. So, add that to the costs, as well.
If you're living on campus, it means you're not only subject to school policies and restrictions while at class, but while you're at home. Some policies can be restrictive or frustrating.
For instance, my university does not allow you to have your own WiFi router, because the worry of signal interference. So, this means that all of your Internet traffic goes through university-monitored devices and networking.
Adjusting to Independence
College itself is a big change. Classes are taught differently, there are different expectations, there are more organizations to be part of, more people. Put all that change together with the removal of the safety net of the family home, and there could be some anxiety and homesickness to be concerned about.
Students also have to become more responsible for their day-to-day needs. They need to remember to buy their toiletries, do their laundry (they need to know how!), get and prepare food, follow their schedule, set up appointments, and on and on. This can be quite a burden on new students, and a source of stress and frustration.
These things can be mitigated by preparing your child for independence well before college time.
Your student won't be tied to home and the habits that developed there. They'll be free to pursue their interests and activities without being under your scrutiny. So, they may try things they wouldn't normally, because they don't have to worry about your feelings on the matter.
They'll also be much closer to their classes, campus activities, study groups, organizations, and social events. A lot of what your student can do at college, that really makes the experience fulfilling, is done outside the classrooms. My university advises all new students to join clubs, because students in clubs are statistically more successful in their college career.
You will also have some freedom. Any regular chores or duties that you may have been doing because of your student will largely go away. Smaller meals can be cooked, less dishes will get dirty, laundry can get done less often. Household outings to the movies or restaurants also mean a lower cost, presuming you don't feel the need to include the student.
When you live in a dorm, you often pay for everything up front. So, you don't have to worry about monthly bills or setting up utilities.
Cleaning services are usually in charge of cleaning various parts of the dorm, so the burden doesn't completely fall on the student.
The meal plans that are usually required generally provide for a good variety of prepared foods. Your student won't be eating just ramen noodles, or peanut butter from the jar. They'll have to figure out some of their meals on their own, but they'll likely take full advantage of all the cafeteria offerings.
Your student won't get to know the pulse of the school better than by living there. Not only will they get a better sense of the campus culture and workings, but they'll likely meet more of their peers and make more connections. Some of these connections may help them in their schooling, and some may actually help them in their future career.
Depending on their major and career choice, these networking opportunities may be pivotal in landing them the best starting position. I would not underestimate the value of these word-of-mouth and face-to-face interactions.