To be eligible for the Texas EDUCATION Dream act, those children brought into the U.S. (after 3 years of Texas high schools and graduating and wanting to go -- mostly to local community colleges) are required to apply for citizenship when they start PAYING instate tuition.
Plus, it's misleading to call in-state tuition a discount. Rather, it's the
normal tuition rate. People who haven't lived in TX for at least 3 years (or whatever the threshold is) are assessed a surcharge.
As you say, all students are paying their own way (except those with loans/grants/scholarships). Taxpayers aren't subsidizing illegals' tuition at all.
Now, having said that, the question of whether or not the children of illegals should be assessed the out-of-state surcharge, I think there are rational, non-hysterical points to be made on both sides.