Too many Americans are plagued by chronic poverty, income volatility, job instability, and lack of social mobility. In previous posts (here, here, here, and here), I proposed an Adult Student Basic Income (ASBI) that would effectively address these societal ills without diminishing labor market participation or labor productivity.  

The ASBI would provide a $1000 monthly stipend up to six years total (minimum one month at a time) for adults enrolled at least part-time in approved postsecondary education and training programs, from ESL classes to apprenticeships to graduate school. ASBI benefits would not be means-tested, so recipients could work as much as they want without jeopardizing their payments. ASBI payments would stop if recipients failed to meet the participation and performance requirements of their education or training programs, but payments could resume following a reinstatement process.  

The beauty of an ASBI is that it’s affordable: it would be funded partly by the elimination of some government programs, but mostly by declining demand for other programs. For example, the ASBI would replace Pell and SEOG grants and the option of a ASBI would attract beneficiaries away from other programs. In many cases, a person would have to choose between receiving an ASBI or other benefits. That’s because most safety-net programs are means-tested and receiving an ASBI would put one over the income threshold for eligibility. These programs also tend to be less generous than the ASBI and to have more strings attached.

In my last post, I estimated there would be the equivalent* of 26 million year-round ASBI recipients per year, on average. That’s 13% of the 200 million Americans between 18 and 64 who are eligible to receive an ASBI (basic calculation: 6 years/46 years = 13%). With that estimate in hand, here’s a possible ASBI funding scenario:

* The “equivalent” of 26 million year-round ASBI recipients would be a greater number of individuals who receive an ASBI for just part of the year, e.g. 52 million individual who receive the ASBI for six months of the year. It is assumed that many ASBI recipients will not participate in the program a whole year at a time.

Notes:

For comparison: Pell Grant: Maximum $6,495/year (link); SEOG: Maximum $4,000/year (link); SSI: Maximum $794/month (link); and Average SSDI: $1,236/month (link)

TANF benefits for a family of three are well below $1000/month in all but one state (New Hampshire) (link).

Maximum annual EITC range from $543 (no qualifying children) to $6,729 (three or more qualifying children) (link)

The average monthly SNAP benefit (food stamps) in the US was $130 per person in 2019 ((link). Per the 2018-19 Consumer Expenditure Survey, low-income households spend about 15% of their income on food (link). The ASBI recipient’s SNAP benefits may be reduced but by no more than $150 a month, or 15% of the monthly ASBI. Children’s SNAP benefits would not be affected.

An ASBI recipient attending school full-time may no longer qualify for unemployment insurance (UI) if they are unavailable to actively look for and return to work. If they are available and qualify for UI, they will receive a lower UI payment the week they receive their ASBI benefit.  

Per the 2018-19 Consumer Expenditure Survey, low-income households spend about 10% of their income on healthcare (link). Under the Affordable Care Act (ACA), households qualify for subsidized healthcare coverage if household income falls below 400% of the federal poverty level.  ASBI benefits would not be considered when determining subsidy eligibility, but could reduce the subsidy up to $100/month.

References:

Bastian, J. E. and M. R. Jones (2021). "Do EITC expansions pay for themselves? Effects on tax revenue and government transfers." Journal of Public Economics 196: 104355. https://doi.org/10.1016/j.jpubeco.2020.104355

“Biden Proposals Would Significantly Expand Benefits Administered Through the Tax Code”. Tax Foundation, June 3, 2021. https://taxfoundation.org/biden-budget-biden-child-tax-credit/

“Federal Subsidies for Health Insurance Coverage for People Under 65: 2020 to 2030”.  Congressional Budget Office, September 29, 2020. https://www.cbo.gov/publication/56571

“FY 2022 Budget Overview”. Social Security Administration, May 28, 2021. Budget Overview 5.28.21 Signed - Social Security

“Policy Basics: Temporary Assistance for Needy Families” Center on Policy and Budget Priorities. Updated March 31, 2021. https://www.cbpp.org/research/family-income-support/temporary-assistance-for-needy-families

“President's FY 2022 Budget Request for the U.S. Department of Education”. U.S. Dept. of Education, last modified May 28, 2021. https://www2.ed.gov/about/overview/budget/budget22/index.html

“Total monthly unemployment insurance benefits paid in the United States between April 2020 to April 2021”. Statistica, June 2021. https://www.statista.com/statistics/284857/total-unemployment-benefits-paid-in-the-us/

“What is SNAP? An Overview of the Largest Federal Anti-Hunger Program”.  Peter J. Peterson Foundation, April 13, 2021.  https://www.pgpf.org/blog/2021/04/what-is-snap

“US Federal Government Tax Revenue” by Kimberly Amadeo/The Balance. Updated May 17, 2021. https://www.thebalance.com/current-u-s-federal-government-tax-revenue-3305762