 WealthyFamilies Are Buying Out-of-State Homes To Snag Tuition Discounts at TopUniversities |
Source |
American Shipper |
Post Date |
07/18/2025 |
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Colleges have become so expensive that even wealthyfamilies are looking for ways to save on tuition.
While this typically means trying to secure scholarships,another way of snagging lower tuition is becoming increasingly popular: buyingproperty in the state your child will be atting college.
All 50 states offer tuition discounts to in-stateresidents, the reasoning being that residents pay taxes that should offsettheir costs of higher education?nd the savings can be steep.
Public four-year undergraduate degrees have an averageout-of-state tuition cost of $28,297 versus $9,750 for the samedegree in-state, so these savings are not small by any stretch, accordingto Education Data Initiative.
Even the most expensive in-state tuition in the country?illiam and Mary College, running $26,456 forannual tuition and fees?till offers a significant shave off the out-of-statecost of $52,725 for the same degree.
Florida comes out tops for in-statediscounts, with an average tuition of only $4,540. TheUniversity of Florida in Gainesville, for instance, costs$28,658 for out-of-staters but a mere $6,380 for residents, a whopping 77%discount.
The priciest state on the list is Connecticut, with anaverage $37,907 yearly tuition for out-of-staters. Become a resident, however,and watch that bank-busting tuition plunge to $15,763.
The states most famous university, Yale, does not offerin-state discounts, as its an Ivy League institution, but another top-tierschool, UConn, does. Out-of-staters will cough up$39,678 per year compared with $17,010 for in-staters.
Texas, with a plethora of colleges withexcellent reputations, will cost an average annual $24,743 for theout-of-stater but a mere $8,195 for the resident, a hefty 67% discount. (Itshould be noted that the state recently ed its in-state tuition discountsfor persons without legal status.)
Now, add up those reductions up over the four years a childwould typically att college, and perhaps multiple children, and the savingscan easily pay for the property purchased. (Keep in mind that properties comewith their own costs?uch as HOA fees, insurance, and maintenance. Run thenumbers to make sure that its still worth it to buy.)
"Its the No. 1 choice why my clients are movinghere," Houston-based real estate agent Erwin Nicholas, who specializes in high networth buyers, tells Realtor.com? "Pretty much all of myclients are moving to Texas with education-based decisions in mind."
While the Lone Star States many tax benefits are a draw,as is the significantly lower price-per-square-foot home price tag, Nicholas, aformer middle-school teacher, says the many excellent universities and thein-state tuition discounts are drawing buyers from pricier states such as California, Georgia, and South Carolina.
Furthermore, a property located near a university might notonly appreciate more than the average, but also sell faster.
These properties "have a greater appreciation,"says Nicholas. "They are investment vehicles as well as places for yourkids to stay."
College adviser ... and real estate agent?
This kind of savvy financial planning has led to the riseof university-knowledgable agents such as Nicholas becoming nearly as importantto the college-bound student as a guidance counselor, college adviser, or SATtutor.
"You want to get a Realtor?who is educated on thesematters," he says. "I would encourage parents to start thinking abouttheir kids education not just from a scholarship standpoint and making goodgrades, but thinking about what states, like Texas, have in-state tuitiondiscounts and what are the rules you should be aware of."
But dont wait until the last minute to snap up thatin-state property.
Each state will have varying and strict requirements toqualify for cheaper tuition rates. Many, including Texas and Florida, requirethat a student live in-state for 12 consecutive months before qualifying.
And plenty of college-paying folks will have the same ideathat you do. Properties near good schools sell at a premium and can get snappedup quickly.
Houston? city that feeds into numerous top-ranked collegessuch as Rice University, University of Texas, Texas A&M, and University ofHouston?ees homes sp a median 46 days on the market, a 1.1% increase overlast year, according to Realtor.com data, and much shorter than the median 71days in 2017.
To snag that in-state property, you will be competing notonly with out-of-staters but also people already living in the suburbs.
"It doesnt make sense to drive an hour each way toschool," says Nicholas, who guides many suburbanites to buy a house insidethe city limits. Here, the kids can live until graduation, and then theproperty can be used as an income generator.
"Long before the kid gets to college, parents shouldbe thinking this way," he says.
Is it fair?
As with anything where those with means have a significantadvantage over those without, the question of equality arises.
After all, if a family has the funds to buy their kids alocal property to live in while atting school, did the family really needthat tuition discount?
"I wouldnt say so," admits Nicholas. "Butit has more to do with strategy and savvy than fairness."
Given all the financial advantages of establishingresidency to get that tuition relief, are there any downsides to handing overyour newly purchased home to your college-age kids?nd perhaps a roommate ortwo?
"This can go one of two ways," Los Angeles-basedreal estate investor Jameson Tyler Drew, of Anubis Properties,tells Realtor.com. "After two to four years, the house is eitherimmaculate or its trashed."
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