Many of the arguments on both sides of the debate about Maryland's version of the Dream Act are emotional. They deal with the question of whether it is fair to provide benefits in the form of in-state college tuition to students whose parents came to this country illegally, or about whether those who have known no home other than America should be denied the chance to achieve their fullest potential. But it is also a simple question of dollars and cents: How much will it cost, and what do we, the taxpayers, get out of it?
Two professors at the University of Maryland Baltimore County have set out to find the answer, and the conclusion they draw is that the cost-benefit analysis isn't even close. If voters uphold the Dream Act on November's ballot, the increase in costs to county and state governments would be marginal and the benefits substantial. Economics professor T.H. Gindling and public policy professor Marvin Mandell estimate that the net private and public benefit for each annual cohort of students who take advantage of the Dream Act will be about $66 million. Considering just the impact on state and local government budgets, each annual cohort will have a net positive impact of about $6.2 million. (The federal government is a much bigger winner, at a net benefit of more than $18 million.)
More than a dozen other states have similar laws. The logic is that the state has already invested hundreds of thousands of dollars in the schooling of each one of those students, but investing just a little bit more in the form of tuition subsidies for higher education can drastically increase their lifetime earnings potential (and, as a consequence, the taxes they will eventually pay). The recent decision by President Barack Obama to provide the opportunity for illegal immigrant students to avoid deportation and seek legal status — an order Republican presidential nominee Mitt Romney says he would leave in place — makes that investment even more sound because it is unlikely that states will incur these costs only to see their college graduates shipped back to their home countries.
The specifics of Maryland's version of the Dream Act further reduce the risks and costs associated with the program. Only students who have attended Maryland high schools for at least three years and graduated, and whose parents have filed Maryland tax returns for at least three years, are eligible. That makes for a fairly small pool; Messrs. Gindling and Mandell estimate it at about 620 students per year. At any one time, they figure that about 0.6 percent of the 223,000 students in Maryland's public colleges and universities could be taking advantage of the Dream Act.
Those requirements also make it unlikely that having the Dream Act in place will make Maryland a magnet for illegal immigrants. It is particularly ironic that many of those who claim that illegal immigrants will come here in droves to give their children a chance at discounted tuition are the same ones who argue that Maryland's taxes are driving everyone else away.
Likewise, the fear that Dream Act students will take spots in Maryland colleges that otherwise would have gone to citizens is unfounded. As Messrs. Gindling and Mandell point out, Maryland's Dream Act requires students first to go to community college, which has a serve-all-comers policy. That could actually open up some seats in the freshman class at Maryland's four-year colleges and universities from illegal immigrant students who otherwise would have attended while paying full freight. And the increase in transfer students two years down the line is likely to be so small as to have a negligible impact on any one school — the study pegs it at about 10 students per school per year.
The study is detailed, considering the full range of possible effects on behavior as a result of the Dream Act and putting an estimate on how many students will fall into each category based on Maryland population data and the experience of other states with similar laws. It uses well-established models for the economic benefits of increased education, and it accounts for the ways the costs of higher education are shared among federal, state and local governments. The researchers tested a variety of alternative assumptions and found that while the degree of the law's effects varied, they were uniformly positive.
If there is any flaw in the analysis it is that it underestimates the degree to which increasing the education level of this cohort of students will reduce eventual costs to government. The researchers included the likely reduction in incarceration in their model — the only cost reduction they were able to reliably estimate — but not the reduced use of various social safety net services. They also were unable to include the value of increased benefits better educated workers are likely to receive — health insurance, retirement benefits, etc. — or the fact that better educated, more successful workers are likely to have better educated, more successful children. That is to say, this study, which finds substantial fiscal benefits from the Dream Act, is almost certainly understating its value.