I wouldn’t advise any student to do this unless there are extenuating circumstances, like a family illness or something.
It doesn’t really matter how big the company is; hiring is an enormous and expensive undertaking. Losing a head before they even get started is something that will impact any team negatively; larger companies may be better able to absorb the cost, but it’s still rough. Other team members will have to absorb the work, and there’s always a chance the team will lose the head (meaning they can’t hire anyone to replace you). Now, I’m not saying that the student or job seeker should put the company’s needs ahead of their own needs, just laying it out there.
Generally speaking, once a student (or any job seeker) accepts an offer somewhere, they should stop looking for other jobs. It’s generally accepted that you’d cancel any future interviews you have once you accept an offer. If a student has an offer from Company A and is in-process at Company B, which they think they might like better, students should try to contact the Company B and see if anything can be done to see if they can get through the process faster so they have two offers to consider. Sometimes Company B can’t do that, and then the student should decide whether they want to go with the bird in the band and accept Company A’s offer or wants to proceed forward with Company B.
But what they shouldn’t do is accept Company A’s offer, then continue to interview at Company B, and take Company B’s offer and rescind Company A’s. That’s unethical. And - which may be more important to the student - it can actually result in the student being unhireable at that company (or maybe just that team) in the future. Many companies DO keep records of this kind of stuff. Does that mean you’ll be blackballed across the industry. That’s unlikely, but if the industry is very small or tightly integrated, there is the chance that people will get to talking. (For example, I work in video games, and I could easily imagine this story getting around. We’re a small, tight, and incestuous industry.)
(Having a job misrepresented to you is a completely different situation, I think. It’s different if you actually get to the job and you realize it’s very different from what’s advertised. I even think it’s different if you get to the job and you realize that you don’t like it! I’m talking about accepting an offer and then rejecting it before you even begin the job.)
The company is very unlikely to sue though. There’s usually no legal grounds for it - most employment is at-will - and it would cost more money to sue than to just let it go. However, there are situations in which that may be called for - if companies have put forward relocation expenses for students or given them a hiring bonus, for example.
Also, there are situations where this is fine. Family illness is one of those, death in the family, changed circumstances, etc. That warrants a call to the hiring manager and/or recruiter and a discussion.
Higher salary, IMO, isn’t a good reason. Neither is COL - students should be doing this kind of research as they are job hunting.
Sure, plenty of students do it - it’s not a jail sentence. But it’s not great, and it can have some ramifications for the students. So they should consider how much they really want that second offer.