Deciphering college tuition terms

In-state and out-of-state tuition rates are different prices colleges charge based on where you live. Public universities charge less money to students who live in the same state as the college because these schools receive funding from state tax dollars. When your family pays state taxes, they're already supporting these public universities, which is why you get a lower tuition rate as a resident.

For example, if you live in Texas and want to attend the University of Texas, you'll pay in-state tuition rates because you're a Texas resident. However, if you live in California and want to attend the University of Texas, you'll pay out-of-state tuition, which can be two to three times higher than what Texas residents pay.

To qualify for in-state tuition, you typically need to prove you've lived in the state for at least 12 months before starting college. This usually means having a state driver's license, voter registration, or other documents showing your residency. Your parents or legal guardians generally need to be state residents too if you're a dependent student.

Some states have special agreements that allow students from neighboring states to pay reduced tuition rates, even if they're not residents. These arrangements are often called tuition reciprocity agreements. Additionally, some public universities offer merit scholarships to out-of-state students that can help reduce their costs to nearly in-state levels.

Private colleges don't usually have different rates for in-state and out-of-state students because they don't receive state funding. They typically charge the same tuition to all students, regardless of where they live. When researching colleges, always check if you qualify for in-state rates, as this could save you tens of thousands of dollars over four years.