Yes, at my college it worked the same way. I was surprised that dorm residents paid the residential rate even though they technically had a business phone as part of the university Centrex. That meant they could dial 4 digits for other unviersity extensions and be reached in the same way. (They had to dial 9 for an outside line). Back in the days when a message unit meant something, having that feature saved many units and thus money.
It's funny looking at my college yearbook and seeing pictures of the faculty offices. All had a black rotary 6 button keyset. The rent for all those key systems must have been enormous. The university had just cut in a new Centrex when I arrived and the operators were instructed to push the direct dial number on callers. I wonder when they replaced with rotaries with more modern sets and how many generations of telephone sets have been used since then.
The trouble with that was settling up toll charges. Lots of roommates got into disputes over who made what toll calls. When a phone could be used by people in another room or freely in a dorm, abuse is very possible.