NILC: The Economic Benefits of the DREAM Act and the Student Adjustment Act

Below is a fact sheet prepared by the National Immigration Law Center (NILC), discussing the benefits of the DREAM Act and the Student Adjustment Act. More information is available at the Dream Activist website (http://www.dreamactivist.org/)


NATIONAL IMMIGRATION LAW CENTER

The Economic Benefits of the DREAM Act and the Student Adjustment Act
February 2005

■ Introduction
The DREAM Act (Student Adjustment Act in the House) is bipartisan legislation pending in
Congress to clear up the immigration status of and address federal barriers to education and workconfronted by the U.S.-raised children of undocumented immigrants.

Under current law, about 65,000 students graduate from American high schools each year
who have been in the United States more than 5 years but who face limited prospects for
completing their education or working legally in the U.S. because they were originally brought
here by parents lacking immigration status. Among those prevented from working legally or
completing their education are valedictorians, honors students, award winners, homecoming
queens, class presidents, and other student leaders.

These young people deserve a fresh start, both in fairness to them and in our own selfinterest.

The pending legislation would address the issue in two ways:
• by providing a mechanism for certain long-term resident immigrant students with good
moral character to apply for legal residency so that they can work and otherwise fully
participate in their communities; and
• by deleting a federal provision that interferes with a state’s right to determine whether these
students qualify as “residents” for purposes of in-state tuition or other state education
benefits.

■ Impact on the Economy
REDUCED DROPOUT RATES
The DREAM Act would reduce the dropout rate of immigrant students. Foreign-born
students represent a significant and growing percentage of the current student population. The
proportion of foreign-born students in grades 6-12 increased from 1.7 to 5.7 percent from 1970
to 1995.

The children of undocumented immigrants are far more likely to drop out of high school than
are students who were born in the U.S. Immigration status and the associated barriers to higher
education contribute to this high dropout rate, which costs taxpayers and the economy billions of
dollars each year. The DREAM Act would eliminate these barriers for thousands of students.
Beyond eliminating barriers, the DREAM Act’s high school graduation requirement would
provide a powerful incentive for students who have not yet achieved legal residency to remain in
school until graduation. The impact of such a requirement for legal residency is impossible to
quantify, but would likely be huge.

INCREASED INCOME AND POSITIVE FISCAL IMPACT

Because the DREAM Act would lead more immigrants to graduate from high school and
college, it would also increase tax revenues and reduce government expenses. This positive fiscal
impact is likely to be quite large. For example, based on estimates in a 1999 RAND study, an
average 30-year-old Mexican immigrant woman who has graduated from college will pay $5,300 more in taxes and cost $3,900 less in criminal justice and welfare expenses each year than if she had dropped out of high school. This amounts to a total annual increased fiscal contribution of more than $9,000 per person.

The increased fiscal contribution would repay the required educational investment within a
few years and thereafter would provide a profit to taxpayers for several decades.

Some of those helped by the DREAM Act would be encouraged to graduate from high school
but would not go on to college. These, too, would greatly increase their fiscal contribution in the
years and decades to come. Almost half, or about $4,200, of the annual increased contribution of
the average 30-year-old Mexican immigrant woman discussed above is due to high school
graduation. The rest is attributable to the effects of college attendance and graduation.

Beyond fiscal impact, the DREAM Act would benefit the economy by significantly
increasing the income of affected immigrants, thereby stimulating spending and investment.
Again using numbers from the RAND study cited above, the average Mexican immigrant woman
who graduates from college as a result of the DREAM Act instead of dropping out would likely
increase her pretax income at age 30 by more than $13,500 per year.

All of these calculations are based solely on the educational advancements that the DREAM
Act would make possible. The income and fiscal contribution of DREAM Act students would
increase an additional amount due to their newly legalized immigration status and consequent
ability to work legally. Studies of the 1986 Reagan-era legalization program showed a dramatic
improvement in income for the newly legalized population. The cumulative impact of the
DREAM Act on the economy could amount to hundreds of billions of dollars.

A LEGAL WORKFORCE
The impact of the DREAM Act would not be limited to increased earnings, tax revenues, and
social services savings. Freeing thousands of young immigrants to join the legal workforce
would also help business and the economy fill crucial needs.

Under current law, most children of undocumented immigrants who were brought to the U.S.
by their parents are unable to complete their education and are forced to work illegally in the cash economy. Many settle for work as domestic servants, day laborers, ambulatory sellers, and
sweatshop factory workers.

The DREAM Act would make tens of thousands of these young people eligible for work
authorization and Social Security numbers, allowing them to participate above-board in the
regular workforce. Once legalized, DREAM Act beneficiaries would be in a position to help fill
some chronic long-term labor needs that economists predict will threaten our economy if not
addressed in coming decades, including those for teachers, nurses, and service employees.

REWARD CHARACTER
Finally, the DREAM Act is good for the economy because it rewards character. These young
people had no say in the decision that resulted in their coming to the U.S., and it is inefficient as
well as wrong for the government to keep them from the achievements that they can earn by their own talent and hard work in the land where they were raised.