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Alabama is doing it to create an alumni network by irishrock
outside of the Southeast. Arkansas did it our area...gave kids who attended a high school in a state that bordered Arkansas in state tuition and then more scholarship money.
It worked in KC...Arkansas has built up a helluva alumni market here. Kansas is #1, Missouri a distant #2, and K-State is #3, but Arkansas is rising fast.
As to your other question, Auburn is also a public university...I've heard more for engineering and agriculture. My guess is someone at Alabama has figured that out of state tuition may be alright, but teaching a student costs the same regardless of which state they live...so might as well offer up in-state tuition and build up an alumni network elsewhere.