Actually, you'll get a different answer depending on which fabric company you contact. That said, there is existing case law about this issue & the courts determined that as long as the person making the final product legally purchased the fabric (and had no reason to believe the seller was violating any laws) they can use it for any lawful purpose, including reselling the fabric or turning it into something else & selling that new product. The licensing agreement is between the college & the fabric producer -- not the end user. Printing some nonsense on the selvedge of the fabric about it being "for personal use only" does not constitute a binding contract. I strongly believe in IP rights, but in this case, they've taken it far beyond what the law supports. The only issue with which one needs to exercise caution is in advertising the product. But if you're just setting up a booth somewhere called "Betty's College Logo Quilts" (or whatever -- as long as you aren't using a copyrighted/trademarked name), according to
Precious Moments v. La Infantil, your only obligation is to reference on your quilt label that _______ is a copyright/TM of ___________ (for example, "U of I" logo is Copyright © 2016 of The Board of Trustees of the University of Illinois).
Here's a link to the case:
http://www.tabberone.com/Trademarks/...FullCase.shtml
Please note that this case applies specifically to licensed fabric, not to patterns or other designs. If you have any contracts or agreements with the seller of the fabric, those may supersede this law. And, of course, anyone in doubt about IP law should contact a licensed attorney in their state.