Well then the student would do well to not pay and to force the University to take them to court over the speculative invoice. Good luck getting undergraduate students to the University that will give itself the reputation as the enforcement arm of a copyright claim. (NB that in the EU no matter what the University blusters they cannot prevent graduation over unpaid charges.)
Yes there is a graduation as such for Ph.D. students -- it's not such a big deal seeing as it happens post viva/defence and many students don't turn up in person however it is still required to get the piece of paper that says Doctor of Philosophy on it.
I am not a lawyer.