State College Aid for Illegal Immigrant Students Expands as Taxpayer Cost Debate Grows

At least 18 states and Washington, D.C., allow eligible illegal immigrant students to access state financial aid, intensifying disputes over tuition benefits, public spending and higher education priorities.

By yourNEWS Media Newsroom

State-funded college benefits for illegal immigrant students are expanding across the United States, fueling a growing debate over whether taxpayer-supported higher education aid should be available to students without legal immigration status.

About 21 states and the District of Columbia allow certain illegal immigrant students to qualify for in-state tuition, while 18 states and D.C. provide access to state financial aid programs, according to Higher Ed Immigration.

Supporters argue the policies help students who grew up in the United States pursue degrees, increase earnings and contribute more in taxes. Critics say the programs shift costs to taxpayers, reduce limited resources for U.S. citizens and conflict with federal immigration law.

The financial difference can be significant.

At a University of California campus, base in-state tuition is roughly $15,000 per year, while nonresident tuition exceeds $31,000. That means eligible illegal immigrant students who receive in-state rates effectively receive a benefit worth about $16,000 annually compared with out-of-state students.

The policies have expanded over the past two decades as states have sought to increase college access for immigrant students, including recipients of Deferred Action for Childhood Arrivals. DACA provides renewable work permits and temporary protection from deportation for certain immigrants brought to the United States as children.

More than 900,000 people are estimated to be eligible for DACA, and more than 500,000 illegal immigrant students are enrolled in U.S. colleges and universities.

A 2025 report by the Federation for American Immigration Reform estimated that education-related expenses associated with illegal immigration total $5.7 billion nationally.

Ira Mehlman, FAIR’s media director, said the 1996 Illegal Immigration Reform and Immigrant Responsibility Act included a provision requiring states that give in-state tuition to illegal immigrant students to make the same benefit available to U.S. citizens regardless of their state of residence.

States keep “finding new ways to provide benefits to illegal aliens,” Mehlman told The Center Square. “A lot of American students are being shut out of those state universities because those seats are now occupied by illegal aliens, and then taxpayers are being forced to pay for it.”

Mehlman said Texas pioneered a workaround by tying in-state tuition eligibility to completion of three years of high school in the state rather than directly to immigration status.

Texas became the first state to enact such a policy in 2001 through what became known as the Texas Dream Act. In June 2025, the U.S. Department of Justice sued Texas, arguing the program violated federal law. A federal court later blocked enforcement of the Texas Dream Act, and the case is on appeal in the U.S. District Court for the Northern District of Texas.

Advocacy groups have sought to intervene in the case, arguing it was resolved without sufficient judicial review.

Texas records show that public colleges and universities distributed $635.2 million in state-funded gift aid to 133,989 students in 2023. According to Every Texan, 3,566 Texas Dream Act students received $17.5 million in state-supported grants, less than 3% of all state gift aid distributed that year.

The taxpayer cost of programs associated with the Development, Relief and Education for Alien Minors, or DREAM Act, varies by state.

Lance Izumi, senior director of education studies at the Pasadena-based Pacific Research Institute, said taxpayer-funded aid for illegal immigrant students raises fairness and fiscal concerns.

“Government financial aid to illegal immigrant students is wrong on three counts: fairness, fiscal policy and planning for higher education’s future,” Izumi told The Center Square.

Izumi noted that American borrowers collectively owe about $1.8 trillion in student loan debt and argued that scholarships or tuition benefits for illegal immigrant students can reduce resources available to citizens.

“It is also not fair to give lower in-state tuition to an illegal immigrant who broke the law to enter this country, while denying that lower tuition to a law-abiding American citizen in another state,” he said.

Izumi also said some colleges facing enrollment declines may be expanding outreach to illegal immigrant students to offset shrinking student populations.

“In reality, pushing illegal-immigrant enrollment is a way for adults in higher education to save their jobs by finding a new pool of potential students rather than addressing the core reasons for falling college enrollment: politicization of courses, economic irrelevance of many courses and majors, and deteriorating academic rigor,” Izumi said.

Kassandra Gonzalez, senior attorney with the Texas Civil Rights Project’s Beyond Borders Program, is working on the Texas litigation. She said the debate is complicated by the distinction between immigrants who are “lawfully present” and those who have “lawful status.”

“The misinformation and the frankly wrong narrative of this idea that dreamers or students who are able to take higher education with the Dream Act are taking opportunities from others is not the reality of economics,” Gonzalez said.

Gonzalez said immigrant students contribute economically and often remain in their communities after graduation.

“I think the fiction that we hear in the immigration debate in general, like, ‘Oh, well, they’re taking something from someone else,’ I always go back to, well, this idea that they don’t pay taxes, or that these students aren’t contributing. It’s like there’s actual data that they are giving back to the economy of Texas,” Gonzalez said.

According to Every Texan, immigrants in Texas with bachelor’s degrees earn substantially more than immigrants with only high school diplomas. The group estimated that Texas Dream Act students enrolled in 2023 could eventually generate more than $43 million in additional annual state and local tax revenue because of higher education and earnings.

The California Budget and Policy Center estimated that illegal immigrants paid $8.5 billion in California state and local taxes in 2022.

That year, California residents paid an average of $3,734.82 in state income taxes. With about 19.6 million taxpaying residents, that would amount to roughly $73.2 billion in state income tax revenue, excluding sales taxes and higher-income tax brackets.

Mehlman said paying taxes does not place illegal immigrants on equal footing with citizens or legal residents for public benefits.

Just because illegal immigrants pay taxes, “that doesn’t put them on an equal footing with legal residents and citizens,” Mehlman said.

Several states have broadened higher education assistance in recent years. California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Utah, Vermont, Virginia and Washington, along with the District of Columbia, are among jurisdictions offering broad access to state financial aid or grant programs for illegal immigrant students who meet eligibility requirements.

New York enacted the José Peralta New York State DREAM Act, giving eligible illegal immigrant students access to state financial aid for undergraduate and graduate study at eligible colleges and universities.

The state’s 2019-20 budget included $27 million to implement the program when it was first enacted. New York is home to an estimated 21,250 DACA recipients.

Under New York’s DREAM Act, eligible illegal immigrant students may receive awards through the state’s Tuition Assistance Program, which provides up to $5,665 annually. For the 2025-26 budget, TAP provides more than $698 million a year to about 255,000 New York students. DREAM Act recipients are funded through broader aid programs rather than a separate DREAM Act appropriation.

A New York City fact sheet reported that people eligible for the DREAM Act contributed an estimated $1.3 billion to the city’s gross domestic product in 2017 and earned more than $873 million collectively, with average annual earnings of about $18,600.

Illinois also expanded access to state financial aid. House Bill 460 was signed into law by Gov. J.B. Pritzker in December 2025 and added provisions under the Retention of Illinois Students and Equity Act. The law allows eligible illegal immigrant students to apply for state-administered financial aid regardless of immigration status.

The change made eligible illegal immigrant students able to access programs such as the Monetary Award Program grant, which provides need-based aid for higher education. Illinois allocated more than $700 million for MAP grants during the 2024 fiscal year.

Not all states allow such benefits. Alabama, Georgia and South Carolina prohibit illegal immigrant students from enrolling in state financial aid programs, according to Higher Ed Immigration.

The growing divide among states reflects a broader national dispute over immigration, education funding and taxpayer obligations.

Supporters of state aid say students who grew up in the United States should not be blocked from college because of immigration status, particularly when higher education can raise earnings and tax contributions.

Opponents argue that state-funded tuition breaks and financial aid should be reserved for citizens and legal residents, especially while many American students face high tuition, limited grant funding and heavy loan debt.

As more states expand or challenge these programs, court rulings and federal enforcement actions are likely to shape whether illegal immigrant students continue receiving taxpayer-supported college benefits.