Uhhh yes? The schools have only so many spots. In-state students who don't get an acceptance letter receive no benefit when some rich kid from another state or country gets in. The in-state student ends up going to a lesser school and they're worse off for it. The rich kid gets a top tier education and quite likely returns home after graduating.

So yeah. There's absolutely a conflict of interests. I'm surprised this is an unpopular opinion on HN. I expected lots of upvotes. It's a well known and widely discussed issue up here in Seattle.

I think it's long- versus short-term horizons. If your state fills with less-qualified in-staters at the expense of qualified out-of-staters, that feels good now but is uncompetitive in the long run. (Consider what would happen if California's start-up founders hadn't been drawn in by its universities.) If, on the other hand, you neglect the local population then that, too, is bad. Either way, it's a question of balance.

There's no long-term benefit if out-of-state students don't stick around after graduation. This is an even bigger issue with international students due to immigration laws.

There is a difference between less-qualified and under-qualified. The difference between a 3.7 and 3.8 high school GPA is negligible. Top state schools are so competitive that we're splitting hairs.

"The schools have only so many spots"

Thats not true. This number is not static.

Accepting more out of staters INCREASES the total number of slots for in-staters. Because now the university has more money to increase its total size.

Out of staters are a net money gain.