So it looks like for senior design classes the students don't have to be associated with projects where they lose their IP rights. But sponsors have the right to say a project will give all IP to the sponsor. I imagine how this works in practice is all external companies will require they retain IP then the professor creates additional projects where ip can be retained but these are usually canned projects solving some trivial problem that won't really allow the students to go anywhere interesting with the project. I am not saying that's the case but I remember at my undergrad and at the UC school that was the case.