by Matt Palm
Rental assistance vouchers may be a far more cost-effective way for UC Davis to support students on housing than building on campus units. Researchers have long known that ‘demand-side’ assistance such as vouchers are far more cost effective (DiPasquale, Fricke, & Garcia-Diaz, 2002; Shroder & Reiger, 2000). The downside of demand-side programs, however, is that they can inflate area rents (Susin, 1999). This negative impact might be even worse in Davis, where the supply-side response to such increases appears to be politically constrained.
How might student rental vouchers work? Advocates pushing for more affordable student housing have demanded that rents for graduate students be no more than 30% of their Teaching or Research Assistant stipends. This mimics State and Federal policies in which residents of affordable housing projects generally pay no more than 30-33% of their incomes on rents. In a voucher program, as is done with Section 8 vouchers, the graduate students would be expected to pay somewhere between 30% and 40% of their monthly stipend on rent, and the rest would be paid by UC Davis. As with Section 8, there would need to be a rent limit on voucher use to prevent anybody from taking advantage of the system and renting a luxury apartment with spare bedrooms. But these thresholds would be easy to determine using publicly available rental market data.
How much might this cost? This year the UC Davis Campus Travel Survey included critical questions about rents students faced. The average graduate student living off campus paid $944 dollars per month last year. A Teaching Assistant in the middle of the campus’s TA salary schedule (let’s say STEP III) working at half time makes roughly $1800 a month. Under a voucher program, this median TA would pay $545.25 on rent (a third of the stipend) and the remaining $398.75 would either be paid directly to the landlord. That would cost about $4,785 per year.
Is this more cost effective then building a unit? According to the governor’s May Revise, constructing an affordable housing unit statewide costs around $330,000 per unit. Let’s assume UC Davis costs are comparable and that a unit built today by UCD can last 30 years before needing major rehabilitation. According to data on American Fact-Finder, I can compute that rents rose an average of 4.8% a year in Davis while under the latest UAW contract wages have and will rise an average of 4% per year. Based on these inputs, over a 30 year period UC Davis would lose $30,000 over the 30 year time span if students contributed 30% of their incomes, but would save $31,000 and $98,000 over the same time span if students put in 35% and 40% of their incomes towards rent respectively. And we can get these results before factoring in the declining value of money over time (too many people can ‘fudge’ analysis by tweaking this component, so I’ll skip it for now). But including it would only improve cost savings for Davis in these scenarios.
There are non-fiscal upsides and downsides to the approach. Concentrating graduate students, particularly those with children, on single sites can foster a sense of community and mutual support. As friend of mine with baby told me, it would be much harder to be a grad student with a baby if he didn’t live at Solano Park, UCD’s family student housing. Because he lives around other families he sees at the site’s park, he can ask neighbors to watch his son if a quick, urgent errand needs to get done. Were he alone, he’d have to find a sitter. On the upside, a voucher approach gives students freedom to choose where they want to live. Many students prefer not to live in Davis out of a feeling the community is racially and culturally exclusive. A voucher could provide those students with the opportunity to afford to live in a neighborhood in Sacramento or Woodland where they feel safer, where it feels more like home.
Either way, UC Davis and UC System should explore a voucher based approach as an alternative to building on site.
References for those interested:
DiPasquale, D., Fricke, D., & Garcia-Diaz, D. (2002). Comparing the Costs of Federal Housing Assistance Programs. Washington, D.C. Retrieved from http://www.cityresearch.com/reports/Federal Housing Programs.pdf
Shroder, M., & Reiger, A. (2000). Vouchers versus Production Revisited. Journal of Housing Research, 11(1), 91–107.
Susin, S. (1999). Rent Vouchers and the Price of Low-Income Housing (No. W98-004). Berkeley, CA. Retrieved from http://escholarship.org/uc/item/67d5x29s