I'm going to repeat what a lot of people have already said.
The first priority, obviously is financial stability. It might not seem like a big deal now, but 5, 10, 15 years down the road, student loans suck the big one. Never, EVER, place a hobby - especially something like watch collecting above being fiscally responsible - this is doubly true as a student. In other words, don't say yes to that massive student loan just so you can sport an Omega or Tag throughout 4 years of undergrad. It ain't worth it. If you do decide to work while going to school (I did in undergrad, and I pulled summer jobs in Law), put most of that money towards living costs and to mitigate how much you have to borrow for tuition, books, etc.
Second - you're in college or university. This is a time to have fun. This is a time to go out with friends, go on dates, relax, and enjoy life. You can't do that if every single spare nickle and dime is heading towards a watch fund. Like Charles Bronson said, you can only get away with living the University life style once. You can collect nice watches when you're punching in the 9 - 5 routine and longing for the sweet release of death. Right now, if I were you (and I once was), I say get out there, spend your free money having as much fun as possible (within acceptable, GPA maintaining limits).
Finally - watches are really, really cool. But it's still possible to enjoy the hobby without spending lots of money. Seiko for instance offers some wonderful automatics that are very reasonably priced - both dive and dress watches. If you really want to get a small collection started stick with watches that don't drain the account. More than that, though, spend your time learning about watches, learning about their history, their movements, what you like and why you like it. This way when you do graduate, get sentenced to the 9-5 gig and start making a real salary, you'll be really well placed to spend your money.