First of all, this only applies to public universities. The way it works is everyone starts with the same tuition. But in-state students get a big part of it paid by the state whereas out-of-state students pay the whole bill.
In some states (like California State Universities) there’s less funding for Winter or Summer sessions, so everyone has to pay the same amount. Also, after a couple years living there (varies per state) you can claim residency and be eligible for in-state tuition. This doesn’t apply to international students though.
Former staffer at Penn State – The state subsidizes the tuition for in-state residents. The university doesn’t make the cost higher for non-residents, the state makes it cheaper for in-state residents.
Almost all of Penn State’s state funding is earmarked for specific uses – in-tuition tuition, operating state services like ag extensions and maintaining the the back up 9/11 system.
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