What do you do when your mom tries to control who your friends are at 21?

I go to a university away from home, have my own apartment, car, etc. All of which are being paid for by my parents. I’ve been living away from home for 3 years now, but when I’m under their roof I still follow their rules.

I met one of my best friends because our fathers are best friends, but he hasn’t been the best influential person. He hasn’t been going to school and has gotten his license taken away several times because of DUIs. I completely understand why my parents would feel uncomfortable with me being associated with someone like this, but do they really still have the authority to say that I’m not allowed to strictly see one person? I came home one weekend and walked in later than the time I gave them (one of my friends got sick and we had to take care of him), but I told them when I was on my way home and kept in contact. When I got there my parents took away my phone and said that I can’t hang out with my friend anymore because he’s a bad influence.

If it makes any difference, I would never do the negative things that my friend has done. I’m a safe driver, good student, and I’d say I was never really one to rebel towards my parents.
I try to be open and honest with my parents, but when they put me in a situation like this it makes honesty look less appealing. How can I best handle this situation by being honest with my parents and without disrespecting them?