Why $500 million for California’s student housing is ‘a drop in the bucket’

By Mikhail Zinshteyn | CalMatters

Free tuition is great, and California excels at that compared with the rest of the country. But with rents sky-high, affordable housing has become the chief expense for most students – and relief is harder to come by.

Lawmakers have a plan for that: They’ve poured $500 million into this year’s state budget so that public colleges and universities can build affordable housing or renovate existing property.

The plan – part of a commitment of $2 billion over three years if the Legislature fully funds it – may seem like a massive sum, but the amount of housing the money can build is likely a rounding error in the total need for the state’s students.

“It’s a drop in the bucket, but every drop counts,” said Dana Cuff, a UCLA professor and director of CityLab, an urban design research center.

The housing program that lawmakers approved last week and is awaiting Gov. Gavin Newsom’s expected signature is new, part of the heap of surplus cash in the state budget this year. The governor initially proposed $4 billion for student housing but it got halved during negotiations with the Legislature. The deal:

–Creates a grant process that colleges apply for, committing 50% of the money to community colleges, 30% to California State University and 20% to the University of California;

–Caps rents for low-income students at a low percentage of what the median income is in the area. In Los Angeles, monthly rent would be $700 per student;

–Says the money is meant for full-time students only, which by default excludes most community college students.

If the full-time requirement slows down applications from community colleges, “we can adjust in the future,” said Nancy Skinner, a Democrat and state senator from Oakland who chairs the Senate’s budget committee.

That would require another act of the Legislature to change the terms of the housing program, but she doesn’t rule out that the promise of cheaper rent may compel more community college students to enroll full-time if their campuses take up the money. A full-time schedule means graduating faster, but often students can’t attend that many classes because of work obligations.

The argument for more student housing is a political no-brainer — only one Republican lawmaker voted no on the measure. It “relieves pressure on student housing costs while simultaneously increasing supply around universities and helping to improve housing affordability in these areas in general,” said H.D. Palmer, spokesperson for Newsom’s Department of Finance.

But the housing problem besetting all of higher education boils down to an elementary-school math problem: Building homes for students costs a lot, arguably hundreds of thousands of students need affordable units, and all that adds up to an amount that far exceeds what the state is providing in its housing plan.

Scope of the housing problem

Surveys show that a large number of students lack reliable housing options, which means they live in cars, couch-surf, temporarily reside with family or seek other options that make their lives unstable — a terrible recipe for doing well in school.

More than a third of students reported some version of housing insecurity in California, according to a 2019 survey by the California Student Aid Commission. But that masks the range of strife depending on the student. More than half of community college students in Los Angeles experienced housing insecurity, a 2016 survey found. Community college students are often older and have less income, so their economic and social safety nets are more threadbare. But even at the University of California, 16% of those surveyed were housing insecure and 6% of students who receive federal aid grants because of their lower-income status experienced a bout of homelessness.

The UC had 100,000 beds available for students last fall and expects to create space for 25,000 more by 2025, but the system enrolls 285,000 students. (Though not every student without student housing wants it.)

The scale is big. So is the price tag to house all those students.

Cost to house a single student

It’s hard to calculate how much building a unit of student housing costs. Some measures look at the price per bed, which lowers the average cost because placing three students into a room costs a third of having one student live in a room.

“We don’t have a per-bed cost estimate,” said Palmer of Newsom’s Finance Department.

The Cal State system built enough units to house 12,800 students between 2014 and 2020 at a cost of $1.3 billion, which works out to about $100,000 a bed — a figure that is likely higher today given the drastic jump in prices for building supplies. The system also calculated that it had 17,700 students with “unmet” housing need.

All those figures spell out a cost of $1.8 billion just to build the units Cal State says it needed.

But the fresh round of student housing money from the state commits just 30% of the total $2 billion pot to the Cal State, or $600 million – far less than what’s presumably required to meet student demand.

A housing project at UCLA that’s supposed to deliver 1,159 beds by next year costs a whopping $180,000 a bed. The 20% the whole UC system is to get from the $2 billion pool would fall just short of covering two of those structures.

And it’s possible using figures for dorms underestimates the true cost of the housing students need, said Cuff. That’s because many students are older and with families, especially at community colleges. Those households require more space and amenities, such as kitchens. In that case, the units would be closer in cost to what cities spend on affordable housing, which averaged $425,000 a unit in 2016.

But because colleges could build on land they own, especially community colleges that have more available space, a key expense  — buying land — for building homes would go away.

Should community colleges get the most money?

There’s some grumbling within the UC that the system should have gotten a larger share of the state money, in large part because it has a large housing program and can put the money to work quickly.

Lawmakers left the door open to funding a housing plan for students from more than one of the three state systems.

Student housing would be a new enterprise for most community colleges, which typically don’t run dorms. About a dozen of California’s 116 community colleges provide housing, suggesting the system has less experience to get into home-building. The state-funded housing program anticipated that, putting aside up to $25 million that community colleges can use for planning, such as legal fees and engineering studies.

“I highly expect that in the very first year, we will not see as much or as many proposals from community colleges,” Skinner said.

Instead, the plans will come from the Cal States and UCs that have more experience in developing housing.

“Community colleges were all imagined to get housing from their neighborhoods,” said Cuff. But with rents and the price for land soaring, the colleges need to build housing to create community for their students.

It’s also a good use of state money, said Paavo Monkkonen, a professor of urban planning at UCLA. Unlike grant money or financial aid, housing is a one-time expense that pays dividends because it can be used repeatedly.

But for sure the state needs more housing, otherwise the units built with this new money may result in a lottery system where only the lucky few get discounted units. “A better system would be one in which there’s a long-term plan to grow the stock sufficiently that everyone that wants to live there, can,” he said.