There are two ways to make a public university affordable. One is to keep tuition low. The other is to meet full need. Keeping tuition low without meeting full need is of greatest benefit to full-pays, i.e., those from upper middle income households. Meeting full need is of greatest benefit to those with need, i.e., those from low and moderate-income households. Unfortunately, UIUC has the worst of both—it has high tuition relative to many other public flagships, and it doesn’t come close to meeting full need. According to its latest Common Data Set, UIUC meets full need for only 11% of students with need, and on average it meets only 64% of need.
It’s painfully obvious why they enroll as many international students as they do: they need the cash, Restricting the number of internationals wouldn’t be an unambiguous benefit to Illinois residents, and might do more harm than good. Yes, more in-state students could enroll, but other things equal, in-state tuition would need to increase substantially to replace that lost OOS tuition premium—and the financial aid gap would only increase. So you’d probably end up with an even higher percentage of upper-middle-class full-pays, including some who presently don’t make the cut in admissions, while driving away more qualified low- and moderate-income Illinois residents who simply couldn’t afford UIUC and would need to go somewhere more affordable. This is already happening; losing OOS tuition revenue would only make it worse.
Ultimately this gets resolved only if the legislature restores funding (not likely anytime soon, I’d wager), and/or UIUC dramatically increases its endowment (but we’ve already discussed some of the difficulty there with NU and U of C tapping the lion’s share of big philanthropy dollars). Otherwise, UIUC is going to be under tremendous pressure to continue to increase the number of OOS and international students as it chases after tuition revenue.