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What is a “college free agent” in the NHL?

On 27th June 2017, Spencer Foo signed with the Calgary Flames as a "college free agent". My naive understanding of the NHL was that entry-level players came in via two routes:

  • Either they are drafted, giving them no choice as to which team to play for.
  • Or they're not drafted, and can sign with whichever team they can persuade to pay them.

However, it seems unlikely to me that Foo would not have been drafted as he was a finalist for the Hobey Baker Award. How does a good player get to be a "college free agent" and apparently choose which team to play for?

(Feel free to use Foo for specifics in the answer, but interested in the general case).