I don't think there is a requirement that all freshmen live on campus at UMich. But they do promise housing to all freshmen who want to stay on campus [[that isn't promised after freshmen year). A few years back they ran out of housing and had to convert some housing that was reserved for grad students into dorms in order to honor that promise.
U-M and MSU [[to a lesser extent) are also national schools [[i.e. undergraduates are recruited from all over the country), and like you said, WSU undergraduates are largely native to Metro Detroit.
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