2 Strategies to Get In-State Tuition at an Out of State School
Paying for college tuition is a sizeable investment, but did you know out-of-state tuition may cost 2-3 more than in state tuition. At Peachtree, we want to help you find that “unicorn” college – one that fits the social and academic needs of the student and the affordability (financial fit) needs of the family. Proper planning can deliver that perfect fit college for your child and pocketbook. You may have heard one of the following two strategies to help save on out of college costs, but please be cautious before you use them.
Understand and use the Academic Common Market.
By studying in specialized field at an out of state college, you MAY pay in-state tuition rates. For 35 years, the Southern Regional Education Board’s common market has helped students save on the cost of college. With 1,900 undergraduate and graduate degree programs, this could be a good way to find a financial fit college.
What is the Academic Common Market?
It is a tuition-savings reciprocity agreement between 15 states offering in-state tuition to out-of-state student if a specialized major is not offered in your home state. As with any college savings strategy, you have to understand the rules and the process. Many families hear about this opportunity, don’t realize the limitations and assume they are eligible without doing the research necessary to make this a great opportunity.
Tips for using the Academic Common Market:
- You must be a certified resident of your home state. There are 15 participating states
- Know what programs are eligible and approved by your home state
- North Carolina no longer participates due to an appropriations act passed in 2011
- Some programs are only eligible for junior and senior year
By following this approach: selecting career pathway first, finding major second and selecting colleges last, you might be able to use the this strategy.
How not to use this strategy. Every year when we highlight this program, some families don’t take our advice. They use this to cut the cost (financial fit) without factoring in the other two critical elements to finding a unicorn (perfect fit) college. Over 33% of all kids transfer colleges or change majors and if you couple this with the average student not graduating within four years, you will now see the importance of the social and academic fit.
A great example comes from a good friend. Their son wanted to attend Ole Miss, but the parents couldn’t afford the full out of state costs, so the son found a major that would cut the cost. He was a good student who had a creative side – not an engineering mind – so choosing petroleum engineering just to attend Ole Miss was a bad academic fit. Sadly, their son failed out the first year, came back, had to pay full price at the local public college because of his grades (he lost HOPE eligibility), had to live at home and is now finishing his 5th year. Not the college experience he was hoping for in life. We hated telling them not to go this route because we felt like we were killing their son’s dream, but after years of experience we knew this was not in his or his parent’s best interest. When looking at unconventional strategies, be sure to get the advice from a seasoned expert in the field to make sure it is the perfect fit.
Become an in-state resident.
Some students can pay the lower in-state rates if they establish residency. Here’s a simple guide through the steps of establishing in-state residency.
- Duration Requirement – A student usually must maintain a “continuous presence” in the state of their college for 1 year before start of classes for the new term to qualify for in-state residency. Once a student has lived in this state throughout their freshman year, they can be considered for in-state tuition starting their sophomore year. This requirement ensures that the student really does intend to live permanently in the state and is not just there to attend college. The student can demonstrate their investment in non-educational reasons for living in the state through their employment and involvement in local organizations.
- Financial Independence – A student must be relatively financially independent from their out-of-state parents to qualify for in-state tuition. Rules for this requirement vary from school to school, so be sure to check with the college’s financial aid office. Generally, the student cannot be claimed as a dependent on an out-of-state parent’s tax return, and they cannot receive more than half of their income from out-of-state. This means the student must receive more than half of their income through their own employment in-state. This demonstrates that the student can support themselves and function on their own in the state of residency without significant assistance from out-of-state parents.
- Proof of Residency: There are 8 pieces of evidence the student can use to prove in-state residency.
- Ownership of residence
- Full-time employment
- Type of employment
- Professional licensing
- State sources of income
- Payment of state income tax
- Personal property owned within the state
- Aid received from other states
- Ownership of Residence – Although not usually required, a student’s ownership of their in-state home is extremely helpful in qualifying for in-state tuition. If the student does not own a home, they should have a year-round lease or rental agreement to support proof of their permanent residency.
One of the most important things students can do to establish in-state residency is to get a full-time year-long job. This job should be relevant to the student’s career path, especially one requiring a professional license, not a “college job” the student got just to pay in-state tuition. If a student pays the state’s taxes, lives consistently and permanently in the state, and earns their income in the state, they will have a strong case for in-state residency consideration.
Another great way to make this strategy work is combining it with the planning strategy of what we call the 401K condo plan. By building an advanced funding plan, many families can buy a home near the university to cement in-state residency and also lower other college costs by renting the property to other students to cover the mortgage.
Ultimate success comes when you have a comprehensive plan to use admissions selection strategies in combination with college financial planning. For nearly a decade, we have seen the success of these two plans but also the traps and tragedies of these two approaches when misapplied.
To see if this is an opportunity for your family, schedule a complimentary 30-minute call. Schedule a Free 30 Minute Call with me to discuss your situation.
Plenty of other great FREE resources are out there to help. We strive to share them with you (with resources like our high school sponsored workshops, free online web events, our blog library and newsletter.)
