San Marcos, Texas is a nice, quiet, little town. It has a real hometown feel to it. The locals are friendly to students, the traffic really isn't that bad (unless a train comes through, then traffic can get backed up), and the San Marcos River really ties the community together.
Local businesses are very receptive to the needs of students. They offer special discounts, ranging from free car inspections and apartment locating to discounted meals or drinks. San Marcos is also about a 30-minute drive from Austin's infamous Sixth Street. Plus, there are party buses that take you from San Marcos to Austin and back, so you don't have to drive.