They reckon there are over a billion squatters worldwide. The term "squatter" does not imply illegality on its own, but does mean that the occupier neither owns nor pays rent on the property.

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Note added at 6 mins (2010-09-08 00:24:25 GMT)
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for the billion figure, see http://en.wikipedia.org/wiki/Squatter

There are many terms for this, but 'squat' and 'squatter' are among the most common.

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Note added at 13 mins (2010-09-08 00:31:00 GMT)
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While a 'squatter' may sometimes have a legal right, I have never seen that in my experience, and the verb 'squat' invariably applies illegal occupation. Definitions:

# occupy (a dwelling) illegally
wordnetweb.princeton.edu/perl/webwn


# Squatting consists of occupying an abandoned or unoccupied space or building, usually residential, that the squatter does not own, rent or otherwise have permission to use. ...
en.wikipedia.org/wiki/Squatting

# Squatting - In Australian history, 'squatter' referred to those who occupied large tracts of Crown land in order to graze livestock. Initially often having no legal rights to the land, they gained its usage by being the first (and often the only) Europeans in the area.
en.wikipedia.org/wiki/Squatting_(pastoral)

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Note added at 1 day21 hrs (2010-09-09 21:30:40 GMT)
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Hi! 'Squatting' is definitely the term to use in that context. 480,000 hits for "squatting+students+university" - some examples:

Aug 22, 2008 ... Students occupied a property belonging to the University of .... There is no excuse for squatting, in the eyes of the general public you ...
slackbastard.anarchobase.com/?p=1309

Jan 7, 2009 ... STUDENT activists squatting in four Melbourne University terrace houses are vowing to resist eviction as they highlight a critical shortage ...
www.theaustralian.com.au/news/uni.../story-e6frg6of-1111118...

May 5, 2010 ... Squatting in the dorms. Illegal roommates mooch off university housing ... that they are willing to work with students and their guests. ...
uweekly.com/newsmag/05-05-2010/14447/squatting-in-the-dorms

Some students are still squatting one month after their arrival in the UK. .... University of New Hampshire Undergraduate Merit Sc.. ...
www.afterschoolafrica.com/.../ptdf-2009-scholarship-winners...