That means private foundations and booster clubs that now pay for scholarships will pay less and North Carolina taxpayers will make up the difference in tuition rates.
At North Carolina State University, 35 students come from other states each year on full scholarships to play sports.
Supporters say the plan eases pressure on private donors and also frees up money for more scholarships and better facilities.
"Whether we need new equipment or new computers for student athletes -- that sort of thing -- we ask the Wolfpack Club to do it and if they're able to by their annual contributions, they do what we ask them to do," said N.C. State Athletic Director Lee Fowler. "If they have the money."
In fact, it's a win-win situation for universities. They get the students, the better equipment and they never lose money.
Critics say the result is state taxpayers footing the bill for out-of-state students.
"The taxpayers who paid all those taxes over the years to build these UNC schools are seeing their subsidy dollars going to kids from other states," said John Hood, of the John Locke Foundation.
Conservatives such as Hood say taxpayers should not take the place of wealthy benefactors. They also believe the policy undermines the state's 18-percent cap on out-of-state students -- some of those students who will now be classified as North Carolinians -- even though the state is not really their home turf.
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