How Do I How can I build and modify dorms and universities?

You can't exactly modify dorms without using cheat codes

 

Building or altering a Dorm

If you want to build your own dorm, then you need to follow some specific directions so that the dorm works the way it's supposed to work:
-Start with a regular residential lot in your College Town
-Enter the lot and build your desired dorm
-Build so that the dorm doors always face out (or they won't work. The "face side" of the door must be to the public side.)
-Dorm rooms can't have more than one dorm door leading into it (or the locking option won't work.
-Dorm rooms that share a bathroom don't lock properly either.
-Don't change the zoning after you have Sims in the building
-Dorms must have at least one of the following:
+ShinyTyme Cooktop
+Counter islands (at least 6 if you want to have the cook put out all the servings at once)
+Dishwasher or sink in the same room as the ShinyTyme Cooktop
+Garbage can
+Lights
+At least one phone
+Sprinkler
-Once you've built it to your satisfaction, then open the cheat window and use the code changelotzoning dorm
-Save and exit back to your College Town.

To modify an existing dorm you can unlock buy/build (albeit with some limits still) with boolprop dormspecifictoolsdisabled false when you have entered the building. Then you can make your changes and then save & exit to College Town.

 

Ouch! Yes, Maxis said that you have to choose dorms that don't overwhelm your video card. They suggest using smaller dorms if you don't have one of the fanciest video cards.