Why do so few Michigan residents apply to UM?

[romanigypsyeyes]

• Is the (absolute) number of instate students capped by any legislative rule or does UM need to enroll students maintaining a certain percent of seats for instate students?

No.

is there any data that shows the difference in IS vs OOS students at UM?

Not as far as I am aware.

It is hard to reconcile the difference in acceptance rates (~50% IS vs ~25% OOS) by applicant bias alone.

U of M is first a foremost an institution for Michigan residents. Thus, Michigan students get a boost in the application process.