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DREAM Act fails Senate test vote. What does it take to be American?

The DREAM Act has failed the vote in the Senate. The DREAM Act is focused on bringing permanent residency to illegal immigrants that have completed two years of college or military service. In addition, illegal students will gain access to work study programs and federal loans (federal grants will not be made available). The concern voiced before - that such an act would cause a windfall on the education system and drive out citizens - has been disproved in a recent review of ten states who have accepted the Act.
However, in an analysis of 10 states that have gone ahead and expanded eligibility for in-state tuition to undocumented students anyway, Roberto G. Gonzales, a sociology Ph.D. candidate at the University of California at Irvine, found that, contrary to the concerns of opponents, the states "have not experienced a large influx of new immigrant students that displaces’ native-born students or added financial burdens on their educational systems. In fact, these measures tend to increase school revenues by bringing in tuition from students who otherwise would not be in college." Inside Higher Ed
There is a concern among many that support of the DREAM Act will be viewed as "pro-amnesty." In reality, support of this act will help our economy - not drain it. Students will be able to gain an education - and not through grants - but through loans. Using their education, they will enter the workforce at a higher level - contributing more valuable labor - as well as repaying the federal government with interest.
"Our country needs these people. These are the kinds of people who have made America and will continue to make America great," Robert J. Birgeneau, chancellor of the University of California at Berkeley, said at the Tuesday news conference in support of the DREAM Act.
"This is a humane investment, but it’s also a wise economic investment that we need to guarantee the continuing preeminence of the American economy."
Despite arriving illegally, is two years of military service enough to qualify someone for permanent residency? Or is sitting on a wait list the only way someone can 'earn' being American?
UPDATE:
Statements are being released about the vote, which fell 8 votes short of the required 60.
"Children should not be penalized for the actions of their parents," said Senate Majority Leader Harry Reid, D-Nev.
"What crime did these children commit?" added Sen. Dick Durbin, D-Ill., the Senate's No. 2 Democrat. "They committed the crime of obeying their parents and following their parents to this country. Do you think there was a vote in the household about their future? I don't think so."
But Republican opponents of the bill called it the first step to amnesty, which they contended the Senate rejected back in June. "I do not believe we should reward illegal behavior," Senate Republican leader Mitch McConnell said.
"This would be the wrong direction," added Sen. Jeff Sessions, R-Ala. "This would be to signal that once again we're focused on rewarding illegality rather than taking the steps necessary to create a lawful system."
Well, what do you think?
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