When I got my PhD (at a public university), I almost got charged for the out-of-state part of this fictitious tuition because I did not switch my residency to the state where I got my PhD. The requirements for residency were pretty onerous from what I remember and I would have been unlikely to qualify. Instead, I took my "preliminary exam". Upon passing the exam, my title changed from "PhD student" to "PhD candidate" and it waived the out-of-state tuition for the rest of my PhD. So universities take this stuff seriously but have arcane procedures for edge cases like this that kinda make a mockery of the whole thing. That said, I'm grateful I did not have pay in the end!