In-State Tuition Could Save a Bundle — If You Establish Residency

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Paying for college can be a huge financial burden, especially if it’s an out-of-state rate. The difference between in-state and out-of-state tuition averages $13,310 a year, according to In-State Angels, a company that help students navigate the process of establishing residency for tuition purposes.

Establishing residency can potentially save you tens of thousands of dollars, but  successfully doing so is a daunting task.

Jake Wells, a native of Vancouver, Washington, and In-State Angels’ founder, started the company after failing to establish residency at the University of Colorado-Boulder. He graduated in 2007 more than $150,000 in debt.

To avoid his mistake, Wells says students considering residency for tuition purposes should do thorough research before getting started.

“You have to commit to the process,” he says. “If you’re trying to figure it out as you go, you will fail.”

Requirements to become a resident vary widely by state and university, which can make the process confusing. Generally, you need to establish a physical presence in the state, an intent to stay there and financial independence. Then you need to prove those things to your college or university.

Physical presence: Most states require you to live in the state for at least a full year before establishing residency. In most cases, this means students can’t go home during summer vacation. Ways to prove this include a lease with your name on it and regular bank statements showing that you are spending money in the state. 

Intent: Students must show that they want live in a state for reasons beyond just attending college there. Prove this with a new driver’s license, voter registration card, pay stubs, and a letter explaining your intentions to stay in that state.

Financial independence: Students must prove some sort of financial independence. Again, this definition varies widely, but it almost always involves students filing their own taxes. Some schools won’t let students receive any support from their parents, while others allow parents to pay part of the tuition. Some universities will not grant in-state tuition to students who receive financial aid.

States with strong public universities, including California, Vermont, Michigan and Arizona, tend to have strict residency for tuition requirements. The process is easier in Nevada, New Mexico, North Dakota, South Dakota and Utah, Wells says, largely because these states want to attract more out-of-state talent to their schools.

Out-of-state students also tend to have success establishing residency and getting in-state tuition at the University of Missouri, the University of Iowa and the University of Oregon, says Joe Orsolini, a financial planner from Glen Ellyn, Illinois.

Orsolini says many of his clients consider establishing residency for tuition purposes, but few actually do it after weighing the savings against the time and money it takes.

“The residency advantage gets wiped out when you consider the cost of living away from home, missed tax breaks and credits and the opportunity cost of being out of the work force that extra year,” Orsolini says.

If establishing residency isn’t the right decision for you, there are other ways to get lower tuition rates at out-of state schools. Look into regional reciprocity agreements facilitated by the Southern Regional Education Board, the Western Undergraduate Exchange, the Midwest Student Exchange Program or the New England Board of Higher Education to get lowered or in-state rates. Some colleges also offer scholarships specifically for out-of-state students.

No matter how you do it, take advantage of ways to get in-state tuition if you plan to attend college in another state.

State university diploma photo via Shutterstock.