When considering colleges, admissions rates can seem like the biggest hurdle. But as acceptances roll in and you begin to look at tuition rates, you may see a huge difference between in-state and out-of-state options.
If you’re considering out-of-state schools, tuition can be much more expensive than it is for in-state students. In some cases, it may seem more on par with what you might have expected to pay for private schools.
Does that mean you should exclusively look within your state? That depends on your goals, finances, and what you want out of your college experience. Some people decide to go out of state for programs that aren’t offered in local institutions, some are drawn to a new adventure, and some the opportunity to move away from home.
Regardless of where your first choice college may be, understanding the financial implications of your decision can help you decide on financial aid packages and know what you’re getting into, finance — wise, before you make a final decision.
What Does Out-of-State Tuition Mean?
As you decide which colleges you’ll apply to, you may have public and private colleges on your list. Public colleges are colleges that are funded by a state and receive significant public funds, including taxpayer dollars, to function. Private colleges are not owned by the state and are privately held, with funding coming from tuition, research grants, endowment funds, and charitable donations.
Private colleges do not differentiate their tuition plans based on residency. Public colleges and universities, on the other hand, rely on tax dollars, so they do base their tuition plans on residency. That’s because residents are already “paying” for the university or college through their tax dollars. Out-of-state students, who are not paying local or state colleges, are given a higher price tag.
Whether you’re applying in-state or out-of-state, it’s important to remember that the “price tag” of college tuition is independent of any financial aid, scholarships, loans, or grants you might have available.
Recommended: Private vs. Public College: What to Know When Deciding
Lowering the Bills on Out-of-State Tuition
Out-of-state tuition can cause sticker shock — and may lead to sizable loans. According to Education Data, the average cost of tuition at a public out-of-state college or university is $26,382. In-state tuition averages around $9,212 for the same degree. This number is independent of additional costs, such as housing and books.
While the sticker shock is real, there may be some workarounds that open up your options without piling on unnecessary expenses.
Reciprocal Tuition and Tuition Exchanges
Some states, such as Wisconsin and Minnesota, offer what’s called reciprocal tuition — in-state tuition offered for residents of both states. There are also some tuition exchanges and discount programs.
For example, the New England Board of Higher Education offers a tuition break program that offers discounts to New England residents when they enroll in another New England college. This savings may be as much as $8,000. Certain rules and restrictions apply. For example, you may have to prove the degree you wish to receive is not offered within public universities in your state.
Speaking with your guidance counselor or your financial aid office may be helpful in determining whether these types of programs are available and eligible for you.
Becoming a Resident
“Residency” for in-state tuition isn’t as simple as moving into the dorms. Residency rules vary by state and university. In some cases, residency requires that individuals live in the state for at least twelve months, be financially independent (if your parents/guardians aren’t living in the same state), and have “intent”— i.e., there’s a reason why you’re living in-state beyond just attending school. In some cases, intent to remain in a state can include getting a driver’s license, filing taxes, or registering to vote in that state. States may have differing requirements for defining intent, so it can be worth confirming requirements for the state in which you plan to attend school.
Because residency rules can be strict, establishing residency may not make sense for everyone. But if you’re considering grad school or are going to undergrad as an independent or nontraditional student (someone who doesn’t fit the mold of a recent high school graduate attending college), then it may make sense to establish residency first. This can also help you familiarize yourself with the university and assess whether it’s where you want to spend the next few years.
Starting at Community College
If you have your heart set on a pricey out-of-state school, one way to potentially save is to begin your education at a community college. Like public colleges and universities, community colleges receive government subsidies that can make tuition more affordable. By commuting to a community college and obtaining general education credits, you can then potentially transfer to an out-of-state institution to finish your education and potentially minimize loans.
Considering aid packages
Some private and public schools offer free or reduced-cost college tuition. These “free tuitions” are generally earmarked for students coming from families who make less than a set adjusted gross income, usually around $65,000 per year.
Some public universities also may offer generous scholarship packages to out-of-state students who reflect academic or athletic talent. If you get accepted to a school and receive a financial aid package, it may be worth speaking with the financial aid office to make sure you understand what the package entails. Typically, financial aid packages encompass grants, scholarships, and federal student loans.
Should You Go Out-of-State for College?
There is no right answer when it comes to which college is the best choice for you. But to prepare for college decisions, it can be a good idea to look beyond the honor of admission and consider the financials.
Comparing financial aid packages, assessing additional sources of tuition payment, including family contributions and private scholarships, and assessing how you might pay back your loans can all help you decide the best option for your future and for your wallet. It’s also important to remember that nothing is set in stone.
Regularly assessing your college experience — including the financials — can help determine whether you’re on a path that makes sense for you.
There is no “right” or “wrong” school or path and the right plan for you depends on a variety of factors. Speaking with people who graduated from your prospective school in your intended major can give you an idea of career paths. It can also be helpful to take advantage of any financial aid talk or info session available to get a realistic look at what it may be like when you begin to pay back loans.
At the end of the day, the best decision for you may be the one that addresses your goals and your finances. Understanding different avenues for tuition discounts, including geographic-based tuition exchanges, can open up avenues to less-expensive degree paths. For some students, including grad students, establishing residency may make sense to obtain in-state tuition.
Tuition is complicated, and scholarships, grants, federal loans, private loans, and family contributions are all part of paying for school. You also may use this time to assess the what-ifs: What if circumstances change and a tuition fee that was possible this year becomes impossible next year due to job loss or other change in circumstance? What sort of private loans are available, and what terms do they offer?
For example, students who did take out student loans for college or graduate school may consider refinancing after they graduate. In some cases, refinancing your student loans can help qualifying borrowers secure a lower interest rate, which may make the loan more affordable in the long-term.
Refinancing federal loans eliminates them from borrower protections, like income-driven repayment plans and student loan forgiveness, so it’s not the right choice for all borrowers.
Assessing the tuition price of each place you’re accepted — and considering private loan options, if necessary — can be an integral factor in making a decision that makes sense for all aspects of the next step in your educational journey.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
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