Parties around university and its grounds (6)
I believe the answer is:
campus
'grounds' is the definition.
(I have seen 'Grounds of college' mean 'campus' so perhaps 'grounds' could also mean 'campus')
'parties around university' is the wordplay.
'parties' becomes 'camps' (both can mean sides in a dispute).
'around' is an insertion indicator.
'university' becomes 'u'.
'camps' placed around 'u' is 'CAMPUS'.
'and its' acts as a link.
This may not be correct. Some or all of it may be part of another bit of the clue.
(Other definitions for campus that I've seen before include "university's environs" , "academic haunt" , "University or college site" , "University buildings and grounds" , "Higher education sector" .)