The National Student Exchange was established in the 1967-68 academic year with three state-supported campuses in the United States exchanging seven students among their universities. Administrators on those campuses wanted to help students who could not take advantage of studying abroad by providing them the opportunity to learn about new people and new places through study in another part of the United States. Using NSE, students could attend state-supported NSE member campuses in other states without having to pay the high cost for out-of-state tuition. NSE has retained that basic idea during its development as it has grown to 174 member campuses placing nearly 4500 students for exchange annually.

While the majority of members are still state-supported, NSE now includes several private campuses and Canadian institutions. The basic concept, however, remains the same. Students either pay their normal tuition and fees at the home campus or pay the in-state tuition and fees at their host campus. Private campuses usually prefer the plan where students pay tuition and fees at the home campus as they do normally. Each campus determines the fee payment plan under which it can operate. Room and meals are always paid to the host campus.

Students apply for participation in the NSE office on their home campus. If they are approved for participation, they are accepted on exchange by the host campus on a space available basis. Financial aid is applied for, awarded, and disbursed from the campus at which students pay their tuition and fees.

Before students leave home for exchange they are instructed to have written approval for courses to be taken along with a determination of how those courses will be accepted into their home campus academic program.