As you mentioned, in federal elections, it is the residential address that matters, not the elector's domicile. The concept is different from the provisions in the Quebec legislation. The residence is in fact the place where people say they live. Students are entitled to say that their residential address is that of their parents, and that is where they live.
The problem you mentioned can be solved easily. As I was saying to Mr. Reid, if the student's name is on a list prepared by the university, Elections Canada accepts that and would accept that as proof of residence in that location in order to facilitate things tremendously for students who wish to proceed in this way.