Study: DREAM Acts Would be Economic Boon for States

When state lawmakers consider granting in-state tuition to undocumented immigrants, they tend to focus on strict university-related spending and tuition revenues. A new study finds that government and society would see a net economic benefit.
by | March 7, 2013
 

State-level DREAM acts, which grant in-state college tuition for undocumented immigrants, could have a signficantly positive impact on the economy, according to a new study. Estimating the economic effect of such so-called "tuition equity" legislation can be tricky, and most efforts to do so focus only on university-related spending and revenues. But when broader societal impacts are taken into account, these laws could be enormously beneficial to a state's economy, the report said.

More than a dozen states are considering proposals to grant in-state tuition for undocumented immigrants, joining the 13 that already have such a law in place.

The study, released last month, examined the potential impact of Maryland's tuition equity law, which passed by referendum last November. The authors of the report, Thomas Gindling and Marvin Mandell, who teach economics and public policy, respectively, at the University of Maryland, Baltimore County (UMBC), found that county, state and federal government each would stand to reap net economic benefits because of the law. For government at all levels, the total impact would be a net gain of $39.6 million. For society as a whole, they estimate a total economic benefit of $63.6 million.

As state lawmakers think about offering in-state tuition to undocumented immigrants, the UMBC study could offer a model for weighing long-term net benefits and costs.

When Maryland’s in-state tuition bill came before the General Assembly in 2011, the legislative research division estimated that the sum of direct revenues and expenses to state government would be negative and increasingly so over time. By 2016, the fiscal note predicted that the state would lose $3.5 million per year on undocumented immigrant students. “We thought that the fiscal note was limited in its scope,” Mandell said.

Relying on prior academic literature, Gindling and Mandell concluded that as more young undocumented immigrants attend college, they’re less likely to commit crimes and end up in jail, but more likely to increase their earnings and pay taxes. The authors’ calculations took into account increases in tuition revenue and spending, increases in property, income, sales and Medicare tax revenues as well as reductions in incarceration costs.

Since lawmakers have introduced similar bills in other states this year -- with some receiving unprecedented support in places such as Oregon and Colorado -- Mandell said he hopes to test whether state tuition equity laws would be revenue-positive propositions elsewhere.

“I think the methodology would apply and therefore most of our results would apply,” he said. One difference would be Maryland’s requirement that an undocumented immigrant attend two years of community college before transferring to a four-year university, he said. (Unlike Maryland, some states also offer some form of financial aid to undocumented immigrants, which might also alter the analysis.)

The authors presented their findings at the Society for Benefit-Cost Analysis Annual Conference in February. Mandell said they plan to submit their paper for peer review and publication this spring. An early draft of the study, released last October, is already available.

Here’s a rundown on some of the salient statistics from the UMBC study:

435: The number of undocumented students in each annual cohort who would attend college using in-state tuition

272: The annual number of undocumented students in each annual cohort who would have attended college anyway, but would pay less because of the new law

$14,400*: Per capita college tuition revenue collected by four-year state universities from students who would have stopped with an associate’s degree prior to the law

$12,600*: Per capita amount of additional spending at four-year state universities because of new enrollees who would have stopped with an associate’s degree prior to the law

$4.9 million*: The amount that would be saved by a likely reduction in incarcerations as a result of the law

*In present value dollars, discounted for delays in collections, spending or cost savings.

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