As noted, this is false...

...and was false when I attended IU in the mid-1990s. I can't find a state-by-state breakdown of IU's student body, but according to promotional materials from when IU played in the Pinstripe Bowl in 2015, students from New York and New Jersey alone account for ten percent of IU-Bloomington's enrollment. It's also worth noting that a non-trivial percentage of in-state students are commuters or non-traditional students who aren't part of campus social life, so living on or near campus it feels more geographically diverse than the numbers would suggest. Of course, it doesn't compare to ND's geographical diversity, but Big Ten schools aren't the provincial backwaters you imagine. (None of this is to disagree with the main point that ND shouldn't join the Big Ten).