Live around university grounds (7)
I believe the answer is:
residue
'grounds' is the definition.
(I've seen this before)
'live around university' is the wordplay.
'live' becomes 'reside' (residing is a kind of living).
'around' means one lot of letters goes inside another.
'university' becomes 'U' (abbreviation as in UMass).
'reside' enclosing 'u' is 'RESIDUE'.
(Other definitions for residue that I've seen before include "Material left" , "Remainder, leftover" , "Lees, dregs" , "Dire use of what is left over" , "waste" .)