On the Constitutionality of Charging In-state Tuition

Any student who has applied to college in the United States knows that essentially every public post-secondary institution charges a lower rate of tuition for “in-state” students, or those who live in the same state as where the institution is located. The primary justification for this is that nearly all colleges and universities are publicly funded to some extent (at the state and federal level), so students who are residents of the same state as the institution help fund it by paying taxes. As such, these students deserve to pay less to attend in-state institutions. Then the question is: does a university’s commercial interest outweigh the rights of citizens of other states to be treated the same as citizens of that state? We can extend the commercial interest of the university to the commercial interest of the state because the schools we are concerned with are allocated state funds. I argue that the concept of “in-state versus out of state tuition” is inherently unconstitutional because the Constitution forbids this form of discrimination by state governments against nonresidents via the Privileges and Immunities Clause of Article IV. 

In this article, I use the terms ‘resident’ and ‘citizen’ with respect to a certain state interchangeably because all people who are citizens of the United States are citizens of “the State wherein they reside.”[1] Here I (and the Constitution) use the legal definition of the term ‘resident,’ which does not refer to someone who temporarily lives in a state. This is consistent with the Supreme Court’s use of these terms.[2]

The Privileges and Immunities Clause of Article IV of the United States Constitution states “The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.”[3] This serves to make sure that states do not discriminate against nonresidents. Supreme Court justice Johnson Field wrote that no other provision “has tended so strongly to constitute the citizens of the United States one people,”[4] and Alexander Hamilton wrote that the provision was “the basis of the Union.”[5] This was because the American government needed to be unified and indivisible; as Hamilton knew very well, the existence of strong divisions between the states was a major weakness for the federal government and was the main cause of the failure of the Articles of Confederation. The clause was designed “to place the citizens of each State upon the same footing with citizens of other States.”[6] By contrast, the Privileges and Immunities Clause of the 14th Amendment to the Constitution reads “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.”[7] The main difference between this clause and the one found in Article IV is that this clause protects the rights of citizens of states in general as citizens of the United States. In other words, states must grant to their citizens the same rights as citizens of the United States.[8] All references henceforth allude to the clause in Article IV unless otherwise indicated.

The matter of deciding whether disparities in tuition are constitutional is ostensibly simple if one looks only at the text of the Constitution. The text of the Constitution suggests  that state governments are never allowed to discriminate against nonresidents. However, like with many legal matters, there are a few exceptions to this in practice, as determined by the Supreme Court. The first hint at this came from Chief Justice Fred Vinson who wrote that “the [Privileges and Immunities] clause is not absolute… it does bar discrimination where there is no substantial reason for the discrimination.”[9] Most notably, the Court has declared that a restriction must be “closely related to the advancement of a substantial state interest”[10] in order to be covered by the Privileges and Immunities Clause. Therefore, it is not trivial if the Clause applies to postsecondary education. 

We will use legal reasoning motivated by a past Supreme Court case to examine this problem. In Toomer v. Witsell(1948), one of the central issues was whether the policy of South Carolina to charge nonresidents a higher fee for a fishing license was legal. South Carolina charged an annual fee of $25 for each fishing boat a South Carolina resident operated and $2,500 for nonresidents.[11] The Court found that this policy was unconstitutional, not simply because the fee was higher, but because the fee of nonresidents was one hundred times the fee of residents; in fact, Chief Justice Fred Vinson articulated that “the State [of South Carolina] is not without power… to charge nonresidents a differential which would merely compensate the State for any… expenditures from taxes which only residents pay.”[12]With regard to the vast difference in financial burden, Vinson wrote that it is unrealistic to “[conclude] that there was a reasonable relationship between the danger represented by noncitizens… and the severe discrimination practiced upon them.” Vinson is saying that a state which discriminates financially would be acting lawfully if the state only discriminated to an extent sufficient for financial compensation and no further. Clearly, the multiplicative factor of 100 in Toomer is excessive by this test, since it is not reasonable that residents’ contributions to state tax collection warrant such a wide disparity.

We will now analyze statistics to see if states meet Vinson’s exception with respect to college tuition. According to the National Center for Education Statistics, part of the research arm of the United States Department of Education, the average cost of tuition and other fees for an in-state public college in the 2018-19 school year was $9,212; the corresponding amount for an out-of-state public college was $26,382, which is nearly three times more.[13] The average difference was $17,170. When looking on a state-by-state basis, only four states had an average difference of less than $10,000, with seven states having an average difference of over $20,000. By analogy to Vinson’s line of argument in the majority opinion in Toomer, it is unreasonable to claim that nonresidents and their families would have paid $17,170 on average if they were residents through state taxes. This is because, while public education accounts for over twenty percent of direct expenditure by state and local governments,[14] state spending on postsecondary education is a fraction of this expenditure, and only a fraction of the taxes an individual pays go to education. An average person realistically does not pay more than $30,000[15] in all of their taxes, so it is not fair to claim that $17,170 would make up for their contribution to postsecondary education. Therefore, this financial disparity is excessive and does not meet Vinson’s exception.

From a more qualitative perspective, a state has a substantial interest in increasing tuition for nonresidents because it relates to the economy. The state government is effectively “looking out for itself” by price discriminating, or charging higher rates of tuition to out-of-state students who do not pay taxes to the state. However, this is a narrow view of the issue because state finances are not the only factor in determining a legal issue. In fact, the Supreme Court of the United States has previously declared that “the [Privileges and Immunities] clause protects fundamental rights.”[16] In a case where nonresidents of Montana were charged higher hunting license fees, the state regulation was upheld because “the right to engage in recreational activities is not a fundamental right.”[17] It is also said that hunting elk was not “basic to the maintenance or well-being of the Union,”[18] Then the issue is whether the right to a postsecondary education fulfills the latter condition. I argue in the affirmative because differing barriers in education are inconsistent with American values of equality of opportunity.

A union of states would not exist if the citizens of different states could not easily move between them, and so, in an increasingly educated world, state lines are reinforced and a spirit of unity is undermined when citizens cannot easily go to college in different states. The excessive financial burden placed on nonresidents severely limits citizens’ ability to go to postsecondary institutions located outside of their home state. While the Constitution has been interpreted to support the existence of a difference in what nonresidents are charged, it does not support such a large and disproportionate burden which is unnecessary to the operation of state governments. 

 References

[1] U.S. Constitution, amend XIV, § 1

[2] Building Trades v. Mayor of Camden, 465 U.S. 208 (1984)

[3] U.S. Constitution, art. IV, § 2, cl. 1

[4] Ibid.

[5] Hamilton, A. Federalist No. 80

[6] Paul v. Virginia, 75 U.S. 168 (1869)

[7] See footnote 2.

[8] McCann, H. Privileged for Being Stationary: Why the Practice of Differentiating Between In-State and Out-Of-State Tuition Rates is Unconstitutional. (2016) Belmont Law Review, vol. 4, article 12. 

[9] Toomer v. Witsell, 334 U.S. 399 (1948)

[10] See footnote 3.

[11] See footnote 9.

[12] Ibid.

[13] National Center for Education Statistics. Digest of Education Statistics, 2019. https://nces.ed.gov/programs/digest/d19/tables/dt19_330.20.asp

[14] Tax and Policy Center. Taxes and Public Education: We get what we pay for… When we want it. May 2, 2018. 

https://www.taxpolicycenter.org/taxvox/taxes-and-public-education-we-get-what-we-pay-when-we-want-it

[15] GOBankingRates. Best and Worst States for Taxes, October 1, 2020. https://www.gobankingrates.com/taxes/tax-laws/best-worst-states-taxes/

[16] See footnote 9.

[17] Ibid.

[18] Ibid.