"הסטודנטים לומדים באוניברסיטה."
Translation:The students study in the university.
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In the UK, "college" can refer to a high school or trade school. In the US, one receives the same degree at a college as they would as an undergraduate at a university. University just refers to whether the institution has a graduate school.
(I explained both because I don't know where you're from.)
The use of these terms are often used inconsistently in the U.S. Many would-be 'universities' continue to use the name 'college' no matter how big they grow, even when they have/offer multiple 'colleges', 'degrees', and/or 'schools' (e.g., undergraduate, graduate, dental, and so on, as already stated), depending on how some of these terms are defined.
The word bank gave me the option to phrase this as "The students study in a university.", which was marked as wrong. I don't believe there's any reason that wasn't a correct answer. Nothing about באוניברסיטה requires it to be "the university" but not "a university", does it?