We paid for college expenses (he had the direct student loan), and gave him a monthly sum to pay for rent, utilities and food. We also paid for a small meal plan/dining dollars for his days on campus. He did not have a car. We had him use his earnings for entertainment (beyond what he had left over from the monthly support).
As others have said, depends on the family. If I could afford it, I would not want my student feeling like they had to increase their work hours in order to live, but also want them to learn to learn to budget based on their earnings, especially for non-essential spending.