I commute every day from New Eltham to Charing Cross, which takes about 25 minutes (quicker if it's a fast train) and then there's about a 15/20 minute walk from Charing Cross to the SOAS main campus (I could get a tube and be there in about 5 minutes, but I'm using the walk as a get fit exercise xD). it works for me because the cost is so much cheaper than what halls would cost me - it's about £89 for a month travelcard while accomodation would be more than that for a week. I also had a very slim chance of getting accomodation due to the fact that I do live reasonably close and there are so many foreign students and students from far away in the UK - they obviously take priority. I wouldn't say that I miss out on a lot of the social things - I have to leave some things early, but that's mainly just because I don't want to get the midnight train (teeny bit scared..), but I've had a lot of offers from new friends to stay at their dorm rooms if I ever want to.
Basically, it's a much better option for me financially, particularly as I have to save up for a year abroad. I could've gone to a uni further away like Sheffield where I would have had to move out without a problem, but I wanted to go to the uni where I would be happiest, so accepted that I'd be living at home. However, if I was faced with your problem, I'd definitely be looking at moving out because of the distance and how much it'll cost you. As it's a two hour journey it'll be much mroe expensive and the length of travel will take a toll on you - imagine how early you'll have to get up for a 9am lecture?! I have two 9am starts, Monday and Tuesday, and I have to get up at 6 - you need to make sure you don't get the last possible train just in case it's cancelled and you're then stuck. Your grades might suffer as well is you're so tired after the trip. You need to explain this to your parents - surely they don't want you to waste your uni time because of travel. Commuting works for me, but the length of your journey and relative cost would rule it out if I were in your shoes.