University bus services provide fixed-route public transport for students to and from large universities. They are relatively affordable and resource-efficient, but must compete against private cars and taxis which tend to be more convenient and flexible than University bus services. Many students, particularly those with lower incomes, depend on them. University administrators must understand how to improve University bus service in order to treat this group fairly. The main contribution of this paper is to examine how University bus service can help achieve social equity and sustainability goals. It investigates this by reporting the results of a survey of 303 students at Shahid Bahonar University of Kerman in Iran concerning their travel demands and University bus service utilization. Grounded theory and structural equation modeling is used to analyze the daily commute preferences of university students influenced by their characteristics, fleet condition, fares, station condition, and time factors. This study identifies various steps that the university administration can take to make University bus service more efficient and attractive, such as updating the bus fleet, improving stations, increasing security, and improving pedestrian access to stations. Survey respondents reported the highest satisfaction levels with fare levels, the security in buses, and waiting times. Women reported feeling discriminated against in their daily commutes. Poor-quality University bus service contributes to a negative feedback loop that increases automobile use and reduces university travel sustainability.