For me this is a rather complex issue. In Illinios, state universities receive about 30-40% of their revenues from the state, which means mostly state income taxes. (Constitutionally it is supposed to be the majority–read in excess of 50%–but that is another issue). The concept of in state tutition is that if your family is already paying for the university, by paying the state income tax, thus you should, in fairness, be recieving some discount. While the parents of some illegal immigrants pay a minimal income tax, many don’t and most pay far less than your average since taxes are graduated/scaled. Yes all God’s children deserve help. But if you went by the principle of awarding only those who need help, you would give all the funding to foreign students, since few Americans are as poor as the poor in Guatemala, Tanzania, Burma, etc… Yet no one argues that this should be the case. So a reasonable discussion must procede in terms of how much goes to each category. The issue is what percentage of funding breaks should go to those who have already paid for the school (generally in state residence who paid to build the university) and what percentage should be another form of welfare. Personally, I might only use private donations for non-state residents, and use state revenues only for state residents. The problem with this is that donors don’t really intend for their money to be used in that manner, and thus it could lead to fewer or smaller donations.
While I agree with the principle that the children of illegal immigrants should not be “punished” for what their parents did (illegally immigrate and thus take resource illegally, which we used to call stealing). At the same time it is possible to look at in-state tuition as a fairness issue, in terms of who paid for it, and by this sense legal status matters less than residency.
But I raise these questions, because I don’t think they are as simple as you imply.