I don't think this is true. My friend got an internship in palo alto and study in UIUC. I guess if you study in Stanford or Berkeley which are closer to the silicon valley it is more easy, but not with Santa Cruz. (~1.5+ hours of driving in each direction in traffic), so In both cases you will need to move closer to work for the summer and there is no difference.
Moreover, UIUC is Top10 university and I think you'll have sagnifically better chance to get good internship than with ucsc which is not even top50.
In addition, UIUC is more cheap for living than California and known in the NLP field much more than UCSC.
So I had the same funding and interest, I would have definitely choose UIUC.
