hmmm… I don’t think Michigan is a fair comparable due to its huge endowment. That chart I referenced earlier shows Michigan benefits from an $8.4 billion endowment compared to UIUC’s $1.9 billion.
However, I do know Indiana is being very aggressive in its pursuit of top Illinois residents. They’re offering direct admission to Kelley for instance, with lower stats (ACT 32) and throwing money at students to make the cost around the level of UIUC. I believe most of the students leaving Illinois for Kelley are those who were not early admitted…capable but not good enough for early admit. In this case selectivity hurt yield since many of these students are accepted later in the admission process. (I have little knowledge about the rest of IU.)
Now if I am following you, you are concerned top rated in-state students are going to neighboring state schools based on price. And you believe if tuition were lower or there was more merit aid that the university would retain these students, thereby improving UIUC’s yield. Well, I think that is interesting, but in the current fiscal climate a nearly impossible thing to attain without an enormous influx of $s.
As for your prediction, “a generation from now they will be great Engineering school with 30% enrollment form China and a decent Business school who is still losing student to schools like Indiana that offer a few shekels of merit aid”, we shall see. I think Engineering will continue on its path, hopefully raising the bar across the college, not just CS. The discussion around internationals/diversity could be a new thread. (I really liked this article on the subject: https://www.insidehighered.com/news/2015/01/07/uiuc-growth-number-chinese-students-has-been-dramatic)
The College of Business does have obstacles to face due to funding. However, they are trying to address them and I believe they will continue to partner with companies to bridge the gap. The overall economic health will be a large factor at UIUC.
Anyway, my prediction is that years from now UIUC will still excel in the areas of engineering and business with growth in ACES. However, I’m thinking majors with lower ROIs will suffer. I recently had a discussion with friends about whether I would have attended UIUC. I was a secondary ed high school science teacher. Back then my parents paid for my 4 yrs at a total of around $25K. I got a job straight out of school in one of the most affluent Chicago suburbs at a salary in the mid-$20Ks. Nowadays, a student who wants to teach will incur a school bill around $120K. The starting salary in my old school district is $53K. My how times have changed.