Establishing Residency as College Tuition Strategy

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bungalow10
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Establishing Residency as College Tuition Strategy

Post by bungalow10 »

I live in a state with expensive in-state tuition costs (Illinois) and many of my friends with college age kids are sending them out of state to Iowa or Wisconsin and telling me OOS tuition is cheaper than in-state Illinois tuition.

I looked up one school that I think my youngest will be interested in (he's five but his first sentences was "I a Hawkeye!" much to this Cyclone's chagrin), University of Iowa, and it is $9,000 for tuition in-state and $30,000 out of state.

Having lived in Iowa and Wisconsin, and having a lot of family and friends in both states, it made me wonder if establishing residency in either state would be a valid strategy for reducing tuition costs? My kids are still a long ways off, but that makes it a good time to plan (for example, if we are better off putting money away for a house in Wisconsin or Iowa rather than in the 529 or do we find a way for them to attend high school for a semester in either state).

Has anyone done this, or researched it?
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JoeRetire
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Re: Establishing Residency as College Tuition Strategy

Post by JoeRetire »

I would never move solely in order to attempt to reduce tuition costs.

Your need is too far off, and things change far too quickly and far too often for this to be a reasonable strategy, IMHO.

Put money in a 529, and deal with the college choice (if any) when the time comes.
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ResearchMed
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Re: Establishing Residency as College Tuition Strategy

Post by ResearchMed »

bungalow10 wrote: Mon Aug 20, 2018 8:39 am I live in a state with expensive in-state tuition costs (Illinois) and many of my friends with college age kids are sending them out of state to Iowa or Wisconsin and telling me OOS tuition is cheaper than in-state Illinois tuition.

I looked up one school that I think my youngest will be interested in (he's five but his first sentences was "I a Hawkeye!" much to this Cyclone's chagrin), University of Iowa, and it is $9,000 for tuition in-state and $30,000 out of state.

Having lived in Iowa and Wisconsin, and having a lot of family and friends in both states, it made me wonder if establishing residency in either state would be a valid strategy for reducing tuition costs? My kids are still a long ways off, but that makes it a good time to plan (for example, if we are better off putting money away for a house in Wisconsin or Iowa rather than in the 529 or do we find a way for them to attend high school for a semester in either state).

Has anyone done this, or researched it?
You need to find out how the state (or states) of interest defines "residency" for the purpose of in-state tuition.

I did this many decades ago, except that we really moved.
I then simply waited one extra year to enroll and continue my education. (The rule there/then was to have lived in the state for at least one year, as the primary residence, with some specifics.)
Meanwhile, I took a few courses at the Community College.

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bungalow10
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Re: Establishing Residency as College Tuition Strategy

Post by bungalow10 »

JoeRetire wrote: Mon Aug 20, 2018 8:46 am I would never move solely in order to attempt to reduce tuition costs.

Your need is too far off, and things change far too quickly and far too often for this to be a reasonable strategy, IMHO.

Put money in a 529, and deal with the college choice (if any) when the time comes.
I didn't say I was moving.

I'm looking at possibly as much as $80,000 per kid x three kids = $240,000. Seems like this would be worth doing some analysis on.
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Re: Establishing Residency as College Tuition Strategy

Post by vineviz »

bungalow10 wrote: Mon Aug 20, 2018 8:49 am
JoeRetire wrote: Mon Aug 20, 2018 8:46 am I would never move solely in order to attempt to reduce tuition costs.

Your need is too far off, and things change far too quickly and far too often for this to be a reasonable strategy, IMHO.

Put money in a 529, and deal with the college choice (if any) when the time comes.
I didn't say I was moving.

I'm looking at possibly as much as $80,000 per kid x three kids = $240,000. Seems like this would be worth doing some analysis on.
There is no legal method for establishing residency in a state without actually residing there.
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jminv
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Re: Establishing Residency as College Tuition Strategy

Post by jminv »

bungalow10 wrote: Mon Aug 20, 2018 8:39 am I live in a state with expensive in-state tuition costs (Illinois) and many of my friends with college age kids are sending them out of state to Iowa or Wisconsin and telling me OOS tuition is cheaper than in-state Illinois tuition.

I looked up one school that I think my youngest will be interested in (he's five but his first sentences was "I a Hawkeye!" much to this Cyclone's chagrin), University of Iowa, and it is $9,000 for tuition in-state and $30,000 out of state.

Having lived in Iowa and Wisconsin, and having a lot of family and friends in both states, it made me wonder if establishing residency in either state would be a valid strategy for reducing tuition costs? My kids are still a long ways off, but that makes it a good time to plan (for example, if we are better off putting money away for a house in Wisconsin or Iowa rather than in the 529 or do we find a way for them to attend high school for a semester in either state).

Has anyone done this, or researched it?
Your son won't be going to university in 13 years so I would focus more on saving money than tuition optimization. It's difficult to say what your child will be interested in and where they will want to go this early on. Also, it's hard to say what a certain state's public tuition rate will be in 13 years time, ie, the spread could have evaporated by then.

Although it doesn't include Illinois, there is the western undergraduate exchange that is composed of 15 of western states, 2 territories, and 160 universities that allow students in one state to attend school in another for 150% of the resident rate. It's imperfect because it is only 160 universities but it does provide choice and there are good universities in it. WUE helps with a problem that a number of people face: it's hard to know where your child wants to go to school beforehand and forcing them to go to a low cost local university could prevent them from pursuing the major they are most interested (believe it or not, there are high paid engineering majors that you can't get in Illinois, for example). Perhaps you'll find yourself in one of those states in the future.

Even closer in, I don't think I'd move just for in state tuition. It's also not as simple as just sending your kid to finish high school in another state, you generally have to reside there yourself.

Another way is for the child to wait until they're aged 24 or to get married at the end of high school, which would make them independent for residency purposes. They could also enlist or you could have them go to court when they're older and get themselves declared legally emancipated from you. Then they can establish residency on their own and it can make them independent for financial/FAFSA purposes. When I went to university, I was considered independent for both residency and tuition purposes. I moved to the state when I started school and in the state I went to school in, it took me one year to become a resident so I paid the out of state rate - but had generous financial aid since I was independent of my parents - and then in state tuition for the remainder of the period (If I was dependent of my parents I would have paid the out of state rate the entire time and my financial aid would have been based on their income, it's not a strategy you can do unless the child is independent of you). I also had a lot of merit aid because I picked a school (I am an engineer) that was not the top school I could get in so for them, I was more valuable.
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Re: Establishing Residency as College Tuition Strategy

Post by brodyhill »

I feel like I have some good insight on this one... I attended Iowa State as an Illinois resident until graduation in 2007. At that time, even with rising out of state tuition, it was cheaper than many Illinois in-state universities.

Gaining residency was a strategy of several of my fellow out of state classmates. Look into the terms of what counts as being a resident. When I was attending, it meant you lived in Iowa for at least 2 years and could attend no more than 8 (maybe it was 9) credits per semester. Alternatively you were an instant resident if the student or the student's parents owned a home in the state. My family was not in a financial position to do so, but I had two friends whose parents bought a 3-4 bedroom house just prior to their freshman year, close to campus. The parents rented the place out to 2-3 other students (and their child). Rent covered the mortgage. Student paid in-state tuition, and after 4 years they sold the house for a bit above what they had paid for it.

They made out big.

Check what the resident criteria is and see if you can make it work for you.

Hope this helps.

Go cyclones.
firsttimebuy
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Re: Establishing Residency as College Tuition Strategy

Post by firsttimebuy »

Another way is to do what I did (figured this out by working for the school and talking with the person in charge of deciding residency).

I had to take out student loans and prove that I paid for 50%+ of all bills/tuition/food/etc. for 1 year. Once I did this, I brought in the paperwork and was approved for "resident for tuition purposes". This saved a lot of money, and you can pay off the student loans the next day if you want (I don't think there is any interest on them until after graduation). This is perfectly fine, as loans were less than the total amount that you can gift to one person in a calendar year, but you could even spread it out over 2 years if needed.

This may not be the same for all colleges, but that worked at my college.
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Re: Establishing Residency as College Tuition Strategy

Post by VictoriaF »

Check school ratings. I got an MSME from UoI, Urbana-Champaign. At the time, it was ranked as one of the best public universities, specifically, in engineering. University of Iowa was just one of generic state schools. University of Wisconsin seemed better than Iowa but not comparable to Illinois.

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Re: Establishing Residency as College Tuition Strategy

Post by adamthesmythe »

VictoriaF wrote: Mon Aug 20, 2018 10:26 am Check school ratings. I got an MSME from UoI, Urbana-Champaign. At the time, it was ranked as one of the best public universities, specifically, in engineering. University of Iowa was just one of generic state schools. University of Wisconsin seemed better than Iowa but not comparable to Illinois.

Victoria
Exactly. These universities are not interchangable. There may be majors where Iowa would be a better choice. But not engineering, at least not right now.

Based on another recent discussion- perhaps there ARE universities that have ineffective placement offices. That might be part of the evaluation.
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Re: Establishing Residency as College Tuition Strategy

Post by unclescrooge »

bungalow10 wrote: Mon Aug 20, 2018 8:39 am Has anyone done this, or researched it?
Back in 2005 I considered I might go to business school in Indiana in the future.

I bought a rental property there with utilities in my name as a way to start establishing residency.

Ended up not going to Indiana so I haven't tested to see if it would have worked.
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Re: Establishing Residency as College Tuition Strategy

Post by JoeRetire »

unclescrooge wrote: Mon Aug 20, 2018 10:38 am I bought a rental property there with utilities in my name as a way to start establishing residency.
That gets you an address, but not a residency.

You could have attempted to fraudulently pass that off as a residency while actually being a resident of another state. Hopefully, that isn't what the OP has in mind.
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Re: Establishing Residency as College Tuition Strategy

Post by Maverick3320 »

I'd move to Wisconsin simply because it's a better state than Illinois... :D

In all seriousness, if I had a career with any type of mobility, I would be running, not walking, out of Illinois. The budget situation is going to get a LOT worse before it gets better. You may not be able to plan on tuition costs, but you can be pretty certain that your state (and city, if you are in Chicagoland) taxes are going nowhere but up.
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Re: Establishing Residency as College Tuition Strategy

Post by daveydoo »

bungalow10 wrote: Mon Aug 20, 2018 8:49 am
I'm looking at possibly as much as $80,000 per kid x three kids = $240,000. Seems like this would be worth doing some analysis on.
From experience: you can't even plan like this when they are in 11th grade. The odds of all three wanting to stay in-state and go to the same school are very low, unless you force them. So decide now where and whether you want to force your kids to go to college. You could of course say each kid gets x dollars (and x could be zero) to do with as he or she pleases. I think each kid and each situation is different.

I would have benefited from your strategy -- my kids went or go to out-of-state state schools. But neither warranted re-locating. There is the whole emancipation angle which we did not explore -- Colorado has a one-year minimum and at least one of my kids' friends have done this.
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Re: Establishing Residency as College Tuition Strategy

Post by GreenGrowTheDollars »

Residency for in-state tuition purposes varies from state to state and sometimes varies even for different public colleges within a state.

A few states make it relatively easy for a student to gain in-state tuition classification as an undergraduate -- Utah and Montana are the two I see most frequently. Some (California) are really hard. The majority of states where I've looked for my students determine residency primarily based on where a parent (or, sometimes, the custodial parent) has genuine residency. There are a number of states where a student who has attended high school (say, a boarding school in your possible situation) for some number of years (often, 3) and who graduated from a high school in that state qualifies for in-state tuition. Active duty military and veterans who were honorably discharged often get special consideration; sometimes, their family members do so as well. Sometimes members of the National Guard in a state also get in-state consideration. Emancipation is a much tougher road that many people anticipate.

It is entirely possible for a student to not have in-state tuition classification for any state immediately following high school graduation. A student who moved here with her family from Connecticut in September of senior year faced precisely that problem -- Connecticut no longer considered her a resident for tuition purposes, and Colorado did not either. By spring semester after graduation, she was finally a resident for tuition purposes.

Memories of how it used to be are not a useful path today. Many states have changed their residency rules for in-state tuition purposes. This is especially true of states with highly desirable flagship universities.
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Re: Establishing Residency as College Tuition Strategy

Post by Rupert »

Whether this is a viable strategy is going to vary by state and, to an extent, by institution. States know that people do this, and most have passed fairly strict residency rules to prevent you from doing it, especially if the state runs a generous undergraduate scholarship program for its in-state students (e.g., the HOPE scholarship program in Georgia). It's usually where the parents live, not where the student lives, that matters. The rules are often more strict for emancipated students because the schools know that trick too. (Be careful about emancipation because of the collateral consequences, i.e., how it would affect your taxes, your kid's taxes, your kid's health insurance coverage, your auto insurance, etc.). Buying a rental property in a state, even if you are renting that property to your child, does not make you a resident of that state. Basically, any trick you might think of, they've already thought of and cut off as an option.

Note that the residency rules are often applied less strictly to graduate students. I attended an out-of-state graduate/professional school and was able to establish state residency between my first and second years of attendance by simply remaining in the state over the summer, i.e., not going to my home state to live with my parents, work, etc., and by submitting an affidavit stating that I intended to remain in and work in the state following graduation.
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Re: Establishing Residency as College Tuition Strategy

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