Because they lived in another state in the same country basically, and in theory people could just as easily move in the opposite direction.

But you're right that in practice it is taken advantage of with people renting an apartment for a year and doing the minimum necessarily to register as residents.

So overall you're still incorrect about it being a foreigner tax, implying perhaps they just hate non Americans and want to punish them.

Also same full tuition applies to non residents from other states.