DREAM Act Will Cost Taxpayers $6.2 Billion

Act Likely to Adversely Affect American College Students

WASHINGTON, Dec. 1, 2010 /PRNewswire-USNewswire/ -- A new report from the Center for Immigration Studies examines the costs and likely impact of the DREAM Act currently being considered by Congress.  The act offers permanent legal status to illegal immigrants up to age 35, who arrived in the United States before age 16, provided they complete two years of college.  Under the act, beneficiaries would receive in-state tuition.   Given the low income of illegal immigrants, most can be expected to attend state schools, with a cost to taxpayers in the billions of dollars.  As both funds and slots are limited at state universities and community colleges, the act may reduce the educational opportunities available to U.S. citizens.  

The Memorandum is available online at http://cis.org/dream-act-costs. Among the findings:  

• Assuming no fraud, we conservatively estimate that 1.03 million illegal immigrants will eventually enroll in public institutions (state universities or community colleges) as a result of the DREAM Act.  That is, they met the residence and age requirements of the act, have graduated high school, or will do so, and will come forward.  
• On average each illegal immigrant who attends a public institution will receive a tuition subsidy from taxpayers of nearly $6,000 for each year he or she attends for total cost of $6.2 billion a year, not including other forms of financial assistance that they may also receive.  
• The above estimate is for the number who will enroll in public institutions.  A large share of those who attend college may not complete the two full years necessary to receive permanent residence.  
• The cost estimate assumes that the overwhelming majority will enroll in community colleges, which are much cheaper for students and taxpayers than state universities.
• The estimate is only for new students not yet enrolled.   It does not include illegal immigrants currently enrolled at public institutions or those who have already completed two years of college.  Moreover, it does not include the modest number of illegal immigrants who are expected to attend private institutions.
• The DREAM Act does not provide funding to states and counties to cover the costs it imposes.  Since enrollment and funding are limited at public institutions, the act's passage will require some combination of tuition increases, tax increases to expand enrollment or a reduction in spaces available for American citizens at these schools.  
• Tuition hikes will be particular difficult for students, as many Americans already find it difficult to pay for college.  Research indicates that one out of three college students drop out before receiving a degree.  Costs are a major reason for the high dropout rate.  
• In 2009 there were 10.2 million U.S. citizens under age 35 who have dropped out of college without receiving a degree.  There was an additional 15.2 million citizens under age 35 who have completed high school, but have never attended college.  
• Lawmakers need to consider the strains the DREAM Act will create and the impact of adding one roughly million students to state universities and community colleges on the educational opportunities available to American citizens.  
• Providing state schools with added financial support to offset the costs of the DREAM Act would avoid the fiscal costs at the state and local level, but it would shift the costs to federal taxpayer.  
• Advocates of the DREAM Act argue that it will significantly increase tax revenue, because with a college education, recipients will earn more and pay more in taxes over their lifetime.  However, several factors need to be considered when evaluating this argument:
  • Any hoped-for tax benefit is in the long-term, and will not help public institutions deal with the large influx of new students the act creates in the short-term.
  • Given limited spaces at public institutions, there will almost certainly be some crowding out of U.S. citizens - reducing their lifetime earnings and tax payments.  
  • The DREAM Act only requires two years of college, no degree is necessary.   The income gains for having some college, but no degree, are modest.  
  • Because college dropout rates are high, many illegal immigrants who enroll at public institutions will not complete the two years the act requires, so taxpayers will bear the expense without a long term benefit.  

Data Source:  The analysis in this report is based on one developed by the Migration Policy Institute, which is based on the 2006 to 2008 Current Population Survey (CPS) collected by the U.S. Census Bureau.  We have updated their analysis using the 2009 and 2010 CPS.   The above estimates focus on the number of illegal immigrants likely to enroll in state universities or community college.  It must be emphasized that it is not an estimate of the number of individuals who are eligible for the DREAM Act amnesty or the number that will ultimately meet all the requirements for permanent residence.  

The Center for Immigration Studies is an independent non-partisan research institution

that examines the impact of immigration on the United States.

SOURCE Center for Immigration Studies

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