Maryland's highest court tore up yesterday the trump card used by the University of Maryland against some students who would otherwise qualify for in-state tuition rates, ruling that the university cannot declare a student who is bankrolled by an out-of-state parent to be an out-of-state student.
In a unanimous ruling, the Court of Appeals struck down the follow-the-money section of the policy that says a student who is financially dependent on someone who lives outside of Maryland must pay the higher nonresident tuition rate, a difference of as much as $7,000 a year.
The court said that the University System of Maryland must base residency decisions on other criteria and drop those that relate to a student's financial dependence. The other factors include possession of a Maryland driver's license, liability for Maryland taxes and not being registered to vote in another state.
How many students are likely to be affected and how much money the university system stands to lose is unknown, though university officials estimated affected students would be a small percentage of the out-of-staters among the more than 110,000 students at 11 institutions.
The distinction between in-state and out-of-state students is financially significant: This year at the College Park campus, a Maryland resident pays $5,136 in tuition and mandatory fees, while a nonresident student pays $12,668 - more than twice as much - because out-of-staters are expected to bear the full cost of their education, without help from Maryland taxpayers.
Jeremy R. Frankel, a 1998 graduate of the College Park campus who brought the lawsuit, challenged the requirement that he pay the higher tuition. He maintained that he did not get a fair chance to show university officials that, although his parents' divorce and subsequent moves had taken him out of state from Montgomery County for four years, he was a Marylander. The court agreed with him yesterday.
His father said that for Frankel, now a 23-year-old commercial loan underwriter at a Virginia bank, close to $18,000 was at stake.
"He's got loans outstanding and certainly would stand to receive compensation from this," David Frankel said.
Yesterday's ruling sends the case back to a lower court, where Jeremy Frankel initially lost. The court could decide whether Frankel is due a refund, or return the issue to the university.
The court ruling yesterday told university officials that the "absolute preclusion of in-state tuition status for any student whose primary monetary support comes from out-of-state source arbitrarily and irrationally discriminates against many bona fide Maryland residents."
"Many applications of the policy will be inconsistent with the objective of providing a tuition benefit to bona fide Maryland residents," Judge John C. Eldridge wrote in a 19-page opinion, adding that the policy as written would lead to wrong-headed decisions.
Under the university's policy, a Marylander who is a child of divorced parents, and who would be supported in college by the out-of-state parent, would be required to pay the higher tuition. A Marylander whose grandparent in New York, for example, picked up the tab for college would merit the same treatment under the provision that the court rejected.
Three of the court's seven judges hammered at that point during oral arguments in October 1999. Judge Dale R. Cathell appeared astonished with the affirmative response from the university system's attorney to his question: "You're saying that if I move to Florida, my son is not going to be considered a resident of Maryland, even though he hasn't lived anywhere else?"
At the same time, in a closing footnote in the ruling, the court invited the Board of Regents to rewrite its tuition policy to consider the source of financial support along with other factors. Board of Regents Chairman Nathan A. Chapman Jr. said he will bring up the matter at the Dec. 8 board meeting.
"The key point is we want to make sure that we are fair to both the students and the taxpayers who support higher education," Chapman said yesterday.
Assistant Attorney General Mark J. Davis said the system's leaders were waiting for this opinion before contemplating a rewrite of the tuition policy.
Frankel contended that it was unconstitutional for the university system to set up a process that did not let a student supported by out-of-state parents show he was not a border-hopper. Davis argued that any policy that failed to make the student's source of income the deciding factor in residency decisions would be "an open invitation to fraud."