Grad students are ineligible for the U-Pass, though I think grad student gov't is trying to work something out with RTA. RTA isn't very inclined to do it, though, from what I hear - they know grad students are MUCH more likely to use it, and use it extensively, than undergrads. Something like 1/4 of undergrad passes don't even get picked up, I think.
As a consequence of this, if you post something on the classifieds on Case Forum about it, sometimes you can buy one off an undergrad for some cash. You want to use a Hotmail account and post anonymously. They do have pictures, so you need to post something like "Wanted: U-pass for white caucasian male" or something like that. Once in a very great while, some driver who's having a bad day might ask to actually compare your ID with the pass, but again, that's very rare. In that situation, you can either just pay the 1.50 or whatnot, or make up some story about using a friend's, etc.
Even if that happened once or twice a week, you still come out WAY ahead. Parking is like 600-700, a monthly RTA pass is like 58 (times 8 full months plus 2 weeks on either end) so about 500ish. The U-Pass, even if you pay 50 bucks for it, then 6 bucks a month in "oops" fees, is way cheaper.