There is a big difference between something being "illegal", and something being "against school policy".
Doing something "illegal" can get you arrested and imprisoned. Violating school policy can get you expelled. You cannot be arrested for violating a school policy, but you can be arrested for breaking a law that is the same as school policy. Of course, there is always the possibility that a cop won't know the law, and might make a wrongful arrest, but if a cop makes a wrongful arrest and arrests you for something that is NOT illegal, that is a violation of your Constitutional rights and you can sue the county. But if you know the law, know your rights, and are polite to the cops, you shouldn't have to worry about being wrongfully arrested.
If you are ever stopped by a cop and there is a question regarding the legality of your knife, request that the officer summon the patrol supervisor (this is a standard practice when there is a question regarding the legality of a persons actions). The patrol supervisor is a senior officer who drives around supervising the other patrol officers. The supervisor has more experience and is less likely to make a mistake, or allow a mistake to be made that will result in a wrongful arrest.
Here is a link to California penal code 626.10. It is the California law regarding knives on school/college campuses. This link is for the official California state legislative website where all of California's laws can be found. The sections that are specific to college campus are section (2)- (b), (c), (d), (e).
http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=626.10&lawCode=PEN
In short, under California law, there is no limit on the size of folder that one can carry on a college campus. There is a 2.5" blade limit on fixed-blades, but there are exceptions to that limit, like if you are carrying the knife for the purposes of food prep and consumption (section 2e). California pc 626.10 specifically refers to folding knives and fixed-blades separately, so the term "fixed blade" does not refer to a folder in the open position.
Of course, college administrators are free to impose any blade length restrictions that they want (school policy). But based on the policy you posted, it appears that the blade length limit only applies to fixed-blades.
You could always contact school administration for clarification on school policy. But in any event, I doubt that you will need a knife with a blade 2.5" or longer while on campus.
And if the college is located in the county of Los Angeles, there is a county law that prohibits the OPEN carry of any knife with a blade 3" or longer anywhere in LA. There are exceptions to this blade length limit, but I don't think they would apply on a college campus.