A DACA Recipient’s Guide to Overcoming Financial Barriers

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If you’re a Deferred Action for Childhood Arrivals (DACA) recipient, also known as a DREAMer, you might face some unique financial barriers. Getting approved for a personal loan, buying a home, or paying for college can be trickier when banks and lenders don’t classify you as a permanent resident. But DREAMers still have plenty of options if you know where to look and what to ask. Here are the six most common financial issues DREAMers are likely to face, along with tips and resources that can help.

Paying for College

Unfortunately, DREAMers aren’t eligible for most federal or state financial aid for college, so you won’t be able to file a Free Application for Federal Student Aid (FAFSA) for grants, scholarships, or loans. However, DREAMers can apply for financial aid from private sources, including private loans, and a few states do provide financial aid and/or in-state tuition rates to undocumented residents.

The following states offer in-state tuition rates to undocumented students:

  • California
  • Colorado
  • Connecticut
  • Florida
  • Illinois
  • Kansas
  • Maryland
  • Minnesota
  • Nebraska
  • New Jersey
  • New Mexico
  • New York
  • Oregon
  • Texas
  • Utah
  • Washington

Of these states, New York, Connecticut, and New Jersey allow eligible undocumented students to access state financial aid. Oklahoma and Rhode Island allow in-state tuition rates to undocumented students through Board of Regents decisions, according to the National Conference of State Legislatures. Check out the institution you’d like to attend for more information about in-state tuition rates.

You can apply for a private student loan from a lender like Stilt, Discover, or Citizens Bank in lieu of federal student loans. Most require a cosigner who has a Social Security number. Check the interest rate, repayment terms, and all of the requirements in detail before you sign a contract for a private student loan.

You can also look into a more general personal loan from a bank, credit union, or online lender. An “unsecured” personal loan lets you pay in installments over time without collateral to back your loan. In other words, the bank can’t seize your home or car if you don’t pay a personal loan back. Unlike other types of loans (such as student loans or auto loans), you can use a personal loan for almost anything you want, including school. Some common service charges you might see include origination fees, underwriting fees, credit check fees, and repayment fees. Choose a lender that offers low or no fees and limited charges.

Applying for Scholarships

A scholarship is like a loan for college you never have to pay back. “Many individuals believe DACA is an obstacle to receiving aid directly from the school, which is incorrect,” says Renata Castro, an immigration attorney in Pompano Beach, Florida. “Institutions are free to award scholarships as long as permanent immigrant status is not a requirement to obtaining the funds.”

Here are a few scholarship options for DREAMers:

Paying Renewal, Application and Legal Fees

DACA is no longer accepting new applicants, but if you’ve had DACA at some point in the past, you can submit a renewal application, according to the National Immigration Law Center. “DACA is currently in limbo and what DACA holders should really be doing is seeking legal advice on whether they may be able to pursue alternative relief,” says Castro. “For example, individuals who obtained DACA prior to 18 years old have not accumulated unlawful presence, and as such, may be able to obtain a green card through an employment-based green card application. Seeking competent legal advice is essential to navigating the uncertain waters of immigration law at this time.”

Castro says current DACA holders should save at least $1,000 for legal fees and immigration fees for every renewal period. Fees exclusively for DACA renewal are $495 and can be made online using a credit or debit card, sent through the mail via a credit card number, or check. You can also make a payment in person at a USCIS field office.

In certain situations, you may be exempt from having to pay the renewal fee. If you have to pay the $495 fee but can’t afford it out-of-pocket, you can apply for the following:

Paying for a Financial Emergency

As a DREAMer, it may be difficult for you to get cash in an emergency. But no matter what, taking out a payday loan should be your last resort. Payday loans usually accumulate interest at a predatory rate (as high as 400% per year), not to mention hidden fees. Instead, consider an online lender that provides personal loans with fast funding (sometimes within 24 hours), or better yet, applying for a credit card now and keeping it open for a future emergency. Not all credit card companies will accept your DACA social security number on an application, but many will, including Capital One.

Buying a Home

If you’re no longer a student, your next big financial goal might be buying a home. “Many of the normal avenues are closed to the DACA client,” says Mike Scott, senior mortgage loan originator for Independent Bank. “They cannot qualify for any loan in which the government is the backer. As a result, FHA loans, VA loans and USDA loans are automatically out. Fannie Mae, however, did recognize that the DACA recipient, for all intents and purposes, has a work permit, and allows the clients to qualify for any Fannie Mae product.”

Fannie Mae, or the Federal National Mortgage Association, is a leader in providing housing finance for homebuyers and renters in the United States. The Fannie Mae HomeReady loan, which allows for as little as 3% down, is ideal for DACA recipients. DREAMers must have:

      • Low income
      • Be first-time or repeat homebuyers
      • Limited cash down payment
      • A credit score greater than 620

“Now, keep in mind that just because Fannie Mae accepts the loan to a DACA recipient, not every lender out there will follow up with a loan to a DACA client,” says Scott. “Our current political uncertainty has caused many of the larger banks to turn the client away because of the government’s stance as to the legal residency status of the DACA client.”

Scott recommends looking into several lenders before deciding on the right one — and that includes confirming ahead of time whether a particular banking institution will allow you to pursue a loan. “In the case of larger institutions, they may find that they won’t even open any accounts for the DACA recipient, not even a checking/savings account. DACA recipients should find out if their financial institution will issue a mortgage loan to a DACA recipient. If the answer is ‘no,’ then why do they have their checking and savings accounts with that institution? They should take their money to one that accepts them.”

Building Credit

Your credit score can help you get the loans (and the better interest rates) you want in the future. Your credit score is a three-digit number that ranges from 300 to 850 and indicates to a lender how likely you are to make payments in full and on time. According to FICO, the average credit score is 704.

One of the quickest ways to start building credit is to get a credit card and make payments on time. If you don’t qualify for a “regular” credit card, try applying for a secured card to prove your creditworthiness. A secured credit card requires cash collateral in order to get one. The cash collateral that you put on the card is the credit line, or the amount you can charge. For example, you can put $400 on the card and you can charge up to $400. However, don’t apply for multiple cards within a short timeframe. When a credit card company processes your application, they pull a “hard credit check,” and too many of those in a short timeframe can negatively affect your credit score.

Organizations That Can Help

      • Hispanic Federation (New York): The Hispanic Federation supports Hispanic families and strengthens Latino institutions through education, health, immigration, civic engagement, economic empowerment and the environment.
      • Immigrants Rising (California): Helps young people get the education and career they want through personal, institutional and policy transformation.
      • National Immigration Law Center: The National Immigration Law Center (NILC) defends and advances the rights of immigrants with low income.

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