Are you telling your kid to apply ONLY to public colleges for which they would be classified as in-state students? That seems logical. But is it? Out of state colleges often look for out of state students and offer them tuition discounts and scholarships to encourage them to accept admission offers.
Consider allowing your high school senior to apply to public and private colleges from any state. Compare the programs offered, admission offers, financial aid and scholarship offers they receive and decide based on that.
The lesson here is that you cannot assume that any category of college will be the best deal until you apply and get a response.