For many foreign-born Americans, becoming U.S. citizens is an important turning point in their journey for better economic opportunities. With citizenship, an immigrant has access to better jobs, including many public sector jobs. According to the American Immigration Council, immigrants earn 8-11 percent more money once becoming citizens. As such, employment is a common driver for immigrants seeking to become U.S. citizens. In fact, most immigrants come to the United States as working-age adults -- between the ages of 18 and 60 -- hoping to support themselves and their families. By becoming a citizen, an immigrant's economic outlook increases dramatically and is a critical step in their wealth-building journey; this is particularly true for low-income Latino immigrants.
Wealth is a key component of the American Dream; a necessary step to achieve security and take part in opportunities in the United States. Unfortunately, as it stands, there is a widening racial wealth gap in the United States. In 2013, Whites had 13 times more wealth than a Black family and 10 times the wealth of a Latino family. Furthermore, many Latino immigrant families are already at a disadvantage, as they tend to have lower incomes and struggle to establish savings, let alone build wealth.
According to the University of Southern California, Latino immigrants, who account for about half of foreign-born U.S. residents, tend to have lower incomes than other immigrants. Immigrants coming from Mexico and Central America have average incomes that hover around $45,000 for a family of 3.5 people, putting them at just over 200 percent of the Federal Poverty Level. Similarly, Latino immigrants are more likely to be credit invisible--meaning they have no credit score--according to the CFPB's Credit Invisibles report and may have trouble accessing credit. It is because of this that the citizenship process can be an important crossroads for immigrant families, especially how a low-income Latino family chooses to pay for it.
Naturalizing, the legal process for becoming a U.S citizen, is expensive. The application cost alone ballooned 610 percent between 1998 and 2008, from $85 to $680. In addition to the application fee, an applicant has additional expenses such as English classes, civics preparation, and legal filing assistance, all of which can add hundreds or even thousands of dollars to the process. The mounting expenses disproportionately impact low-income Latino immigrants who are most in need of the economic benefits that come with citizenship. Therefore, the citizenship process is an ideal time for Latino families to make financial choices that are constructive to their long-term financial future.
To help immigrants overcome costly fees for citizenship and also put them on a wealth-building path, NCLR has developed an initiative that combines small-dollar lines of credit with immigration legal services. Legal permanent residents receive both citizenship application assistance and assistance in accessing savings or loan products that can help them build their credit. This national initiative enables citizenship applicants to overcome financial barriers and enter the financial mainstream.
For Javier Moncada, a citizenship applicant who sought legal assistance from The Resurrection Project--an NCLR Affiliate based in Chicago--the immigration loan was the stepping stone he needed. During his legal consultation, Javier learned about a citizenship loan from Self Help Credit Union that could help him pay the citizenship application fee and build his credit. Within a few months of receiving the loan, Javier's credit score went from 0 to 620. He was then able to use his new credit score to seek a car loan from the same credit union. He plans to pay off his car and use his positive credit history and relationship with the credit union for a home loan.
Citizenship and small-dollar lines of credit are just an initial step toward economic mobility and building wealth for Latino immigrants. Successful borrowers will have the increased knowledge and improved credit scores to access larger lines of credit to secure other assets, like purchasing a home or starting a business. Let this Citizenship Day be a call to action to support policies, programs, and people who not only help aspiring Americans obtain U.S. citizenship, but begin their wealth-building journey.
This blog was originally posted on NCLR blog.