IBD discusses Nancy Pelosi supporting the DREAM Act in this editorial:

The speaker of the House backs in-state tuition for illegal aliens from neighboring countries but not for American citizens from neighboring states. Arizonans, among others, think otherwise. And, by the way, it's illegal.

...Title 8, Chapter 14, Sec. 1623, clearly states that "an alien who is not lawfully present in the United States shall not be eligible on the basis of residence within a state . . . for any postsecondary education benefit unless a citizen or national is eligible for such a benefit." Pelosi's legislation speaks only of "alien minors."

This law, passed in 1996, doesn't prohibit children of illegal aliens from getting in-state tuition rates. It merely says that if they do, U.S. citizens from any state must be offered the same benefit if they meet the same qualifications...

In 2005, the Washington Legal Foundation filed a complaint with the DHS under the Section above, and here's a March 2006 update. The current status of the complaint isn't known.