In the latest front of the federal-state immigration battles, the U.S. Department of Justice on November 21 filed suit in the Eastern District of California to block the state’s longstanding policy granting in-state tuition rates and financial aid to students without lawful status. The complaint argues California’s benefit structure violates 8 U.S.C. § 1623, which bars states from providing post-secondary benefits to undocumented immigrants on terms unavailable to U.S. citizens from other states. Named defendants include the University of California, the California State University system and state education officials.
California’s 2001 AB 540 allows any student—regardless of immigration status—who attended a California high school for three years and graduated to pay resident tuition. Supporters say the law treats U.S. citizens and undocumented graduates equally, but DOJ contends it still discriminates against citizens residing outside California. The lawsuit follows President Trump’s April 28 executive order directing federal agencies to challenge state measures perceived to “incentivize illegal immigration.” Similar DOJ actions were recently filed against Illinois and Texas scholarship programs.
![Justice Department sues California over in-state tuition for undocumented students]()
If the federal government prevails, undocumented graduates could see tuition more than triple at UC campuses, jeopardizing degree plans and campus diversity goals. Universities warn that higher out-of-state rates could also hit U.S. military families and domestic students who move mid-high-school. A ruling could ripple nationwide, as at least 24 states offer some form of resident tuition to undocumented students.
For employers, the case matters because California’s tech and biotech corridors rely on "Dreamer" graduates who often transition into work-authorized statuses such as DACA, TPS or eventually employment-based sponsorship. Curtailing affordable education pathways may shrink an already tight STEM talent pipeline.
California Governor Gavin Newsom denounced the suit as "retaliatory politics." State officials vow to defend AB 540 on equal-protection grounds and may seek an injunction to preserve tuition rules while litigation proceeds. A court hearing on a preliminary injunction is expected early in 2026.
California’s 2001 AB 540 allows any student—regardless of immigration status—who attended a California high school for three years and graduated to pay resident tuition. Supporters say the law treats U.S. citizens and undocumented graduates equally, but DOJ contends it still discriminates against citizens residing outside California. The lawsuit follows President Trump’s April 28 executive order directing federal agencies to challenge state measures perceived to “incentivize illegal immigration.” Similar DOJ actions were recently filed against Illinois and Texas scholarship programs.
If the federal government prevails, undocumented graduates could see tuition more than triple at UC campuses, jeopardizing degree plans and campus diversity goals. Universities warn that higher out-of-state rates could also hit U.S. military families and domestic students who move mid-high-school. A ruling could ripple nationwide, as at least 24 states offer some form of resident tuition to undocumented students.
For employers, the case matters because California’s tech and biotech corridors rely on "Dreamer" graduates who often transition into work-authorized statuses such as DACA, TPS or eventually employment-based sponsorship. Curtailing affordable education pathways may shrink an already tight STEM talent pipeline.
California Governor Gavin Newsom denounced the suit as "retaliatory politics." State officials vow to defend AB 540 on equal-protection grounds and may seek an injunction to preserve tuition rules while litigation proceeds. A court hearing on a preliminary injunction is expected early in 2026.
