Have you compared renting with roommates (or in school housing) to buying?
Have you considered when you move away the realtors commissions? The time required to sell? The possibility of prices dropping?
Here is how a mortgage works. You take out a 30 years 5% fixed rate mortgage. Every month you make your payments figuring you are building up a lot of equity. Lets run some numbers. Double check with a lender.
$100k 30 year 5% mortgage. After 7 years you will have paid off $12k of what was owed. you would still owe $88k on the mortgage. If you use a realtor to sell you will lose about 6% or $6k. Add that amount to what you still owe on the mortgage. $88k + $6K = $94k. You would have $6k in equity after 7 years of paying for your mortgage.
You will not be there for 7 years. Lets see what happens with a 5 year mortgage. We have the same $100k 30 year 5% mortgage as before. But now because it is less time you have only paid off about $8,340.
Subtract the same 6% realtor fees as before. You now have $2,340 in equity. But here is the kicker. You paid closing costs when you bought and got the loan. I am sure the closing costs would just about eat up everything you have built up in equity.
In even less time like 2 years, you will almost certainly lose money buying. You could be stuck paying for an apartment you do not want. Yes, it is possible that you could have some home appreciation, but the more likely result would be the foreclosures coming, the massive unemployment, the problems of the economy and tight lending standards making prices go lower.
A real estate housing forecast site for the whole nation. (keep in mind forecasts are not always accurate) http://www.housingpredictor.com/better.html
That site expects 10-17% decline in 2010. that means you would lose far to much money.
Resets Projected to Cause Mortgage Crisis in 2010
That last site has a lot of foreclosure information on it. Study and be informed about the area you would buy in. Understand how financing works and how you really are just paying interest for a long time.
Buy or rent, you have to make the choice. I would consider living in a cramped apartment with many other students to save money. I would consider on campus housing (if available). I would consider buying. Once you look at the true costs involved (including being able to move away easily) make the right decision for you.
Maybe you could live some distance away, take a train, bus, or whatever kind of public transportation they have there and save a lot by spending time getting to school each day.
I do not know the area to tell you where. All I could do was to give you ideas to consider. If you are getting into graduate school I am sure you are smart enough to dig and find out a lot more information yourself. Always keep an eye open and be skeptical of what anyone (myself included) tells you. More so if they could be profiting from giving the advice.