In a major shift, the U.S. government explores giving renters cash, not vouchers

The Department of Housing and Urban Development is exploring the idea of giving struggling Americans cash aid instead of vouchers. That might seem like an unlikely, bold new move for the federal housing agency — except it turns out that back in the 1970s, HUD was already testing the idea.

Before the cash-aid results were even in, however, HUD launched its voucher program that now serves millions of people. A few years ago, a HUD employee came across the reports from its 1970s tests and wondered whether the idea was worth a new look.

“It’s taken us 50 years to come back to it and really experiment with it once again,” says Solomon Greene, who helps develop policy at HUD.

The housing voucher program has been a lifeline for millions of people, but there are real problems. There aren't nearly enough federal housing vouchers for everyone who qualifies, and many people wait years for them. What happens next can be even more frustrating.

When Elizabeth Alvandi finally got a voucher in 2022, she drove from North Carolina to Massachusetts to try and find an apartment near her aging dad. “I am sleeping in my car and doing the best I can to make the most of every moment that I'm there,” she recalled. But for three months she was rejected again and again, or told nothing was available.

“There were a couple conversations that just ended,” she says, “when they asked what my income was and how I'd be paying for it.”

No one said it was because of her housing voucher. In fact, discriminating like that is banned in some 20 states. And yet, Alvandi could not find a landlord to take it.

"Have we been doing it wrong?"

“The underlying problem that we're facing is just because you get a voucher allocated to you does not mean you get to use it,” says Preston Prince, executive director of the Santa Clara County Housing Authority in Northern California.

Vouchers allow recipients to pay 30% of their income on rent, with the government covering the rest. But according to one analysis, 40% of all voucher holders were unable to sign a lease after looking for six months. A 2018 study by the Urban Institute found even higher rejection rates in some cities.

Landlords are put off by agency red tape and things like mandatory inspections to make sure a property is safe. That process can drag on for weeks or months, costing owners money as their rental properties sit empty and making vouchers an especially tough sell in a hot housing market.

Prince has been among a growing number of housing officials and advocates pushing for a different way, even though it can feel risky to tinker with a program that still helps 5 million very low-income Americans.

“I've dedicated 35 years of my career to housing,” Prince says. “Asking that question of, like, ‘Have we been doing it wrong?’ is a little scary.”

The idea of using cash instead of vouchers has gotten a boost from successful pandemic aid programs, as well as from dozens of basic income experiments around the country. Philadelphia is already testing this, giving cash directly to 300 renters. The federal government is now exploring that on a far bigger scale.

This summer, HUD put out a formal request for more research on the impact of paying renters directly. The department has no new funding to do that itself, so it called on others to organize experiments, though HUD did offer a suggestion on how they could work.

“There are some tricky things that agencies will have to go through when they do this,” says Brian McCabe of Georgetown University, who worked on this issue during a recent stint at HUD.

He says a key goal of cash is getting people housed faster. So one big challenge will be how to carry out inspections without slowing down the lease process. One option could be a self-inspection.

“We might have a checklist and say 'these are the things I'm looking for.' It may be that I move in with cash and then after I've moved in, the agency comes and does an inspection,” McCabe says. And maybe that inspection is done remotely over video.

Another question is whether tenants would be able to spend their monthly cash aid on something other than rent. Advocates say trusting families with that kind of flexibility could help them better manage urgent, competing expenses, although it also opens up the possibility that more people may fall behind on rent. On the other hand, if the cash aid could only be spent on housing, how could that be enforced without re-creating too much red tape?

Cash might allow people to move to better neighborhoods

James Riccio, with the research group MDRC, has taken up HUD’s call to explore cash payments and will help design one pilot program. It needs more funding, but so far has signed up six housing agencies across the country, including the one headed by Preston Prince in Santa Clara County.

Riccio says they will evaluate whether having money on hand helps more people find a place to live. “Will the whole process of leasing up happen more quickly? Which could save time and money for the housing authority and certainly for tenants as well,” he says.

He also wonders if cash could make it easier for people to move to better neighborhoods.

That was a core aim when then-President Richard Nixon called for letting people make their own decisions about where to live. In a special message to Congress in 1973, he said traditional public housing had left people isolated in “monstrous, depressing places — run down, overcrowded, crime-ridden, falling apart.” But half a century later, Riccio says it’s still the case that “voucher recipients tend to concentrate in a smaller number of higher poverty communities.”

Solomon Greene of HUD says these new tests will take years. And if HUD ever did want to make a large-scale shift — from paying landlords to paying tenants directly — it would need congressional authority. For now, he says housing vouchers will continue to help the millions of people who depend on them.

“Your cost burden goes down. You are more likely to be able to stay in your unit longer,” he says. “There's a rich body of research showing that vouchers are the most effective way of preventing recidivism or returns to homelessness.”

Could giving renters cash do all that? Greene says emphatically that at this point, “we don’t know.” And HUD won’t make any changes until there’s evidence they work.