Why Student Housing is the Next Frontier in Affordable Housing Investment

Introduction: Why This Episode Matters

When most people think about affordable housing, student housing doesn’t always make the list. Yet, in California, up to 20% of community college students and 11% of CSU students experience homelessness each year.

That reality affects not only students, but parents, communities, and the future workforce.

In this episode of the Affordable Housing & Real Estate Investing Podcast, host Kent Fai He speaks with Kate Rodgers and Ryan Lenney, co-chairs of the Student Homes Coalition. They reveal how zoning reform, streamlined approvals, and smarter policies could unleash thousands of desperately needed student housing units.

For developers, investors, and housing advocates, their work opens a hidden door: student housing isn’t just a moral imperative, it’s a massive opportunity to build affordable units with reduced entitlement risk.

Why is Student Housing Demand Exploding in California?

Across the UC and CSU systems, on-campus housing capacity falls far short: only 35–40% of UC students and 11% of CSU students live on campus.

Out of 116 California community colleges, just 14 have student housing at all.

This mismatch forces students into crowded apartments, long commutes, or even homelessness. Off-campus rents near campuses often exceed tuition itself, making higher education financially unsustainable for thousands.

Kate and Ryan highlight a critical fact: without more units, affordability programs can’t solve the crisis. “We simply cannot argue there is no demand for student housing at community colleges,” Kate stresses.

How Can Developers Partner With Universities to Bypass Zoning Barriers?

One of the most overlooked opportunities: UC and CSU campuses in California have land use authority exempt from local zoning. That means developers who partner with universities can unlock high-density projects on parcels otherwise restricted to single-family use.

Kate explains: “If you’re a developer and you say you have a parcel zoned for low density, if you partner with a university, you can have unlimited density because you’re not subject to those local standards.”

For investors frustrated by endless entitlement battles, this creates a new pathway: partnering with universities can dramatically shorten timelines and reduce risk.

What Is “Ministerial By-Right” Approval and Why Does It Matter?

Traditional development in California often requires discretionary city council votes, subject to NIMBY pressure and lawsuits. These delays can stretch projects from 12 months into eight years—a death sentence for most affordable housing deals.

Through legislation like AB 893, the Student Homes Coalition is advancing ministerial by-right approval for student housing near campuses and transit hubs.

By-right means:

• If your project meets health, safety, and affordability standards, you can build.
  
  

• No discretionary council vote.
  
  

• No CEQA lawsuits.
  
  

As Kate puts it: “We want to reduce unknown costs. By allowing ministerial by-right review, developers gain certainty, which is the biggest killer of projects today.”

How Do Student Housing Bills Create Both Supply and Equity?

Ryan and Kate break their policy priorities into three pillars:

1. Tenant Protections – safeguarding students from predatory landlords and deposit theft (see AB 2801, which strengthened rules around security deposits).
   
   

2. Immediate Support – expanding funding and wraparound services for homeless students.
   
   

3. New Supply – upzoning land and streamlining approvals to make student housing financially viable.
   
   

One breakthrough: AB 893 requires developers to include at least 15% low-income units and ensures financially eligible students (Pell Grant, Cal Grant, Promise Grant recipients) can access them—closing a gap where students were historically barred from LIHTC or Section 8 units.

Key Insights for Investors and Developers

• Partnerships with universities allow higher density development outside local zoning restrictions.
  
  

• Ministerial by-right approvals reduce entitlement risk, creating faster timelines and more predictable pro formas.
  
  

• Student housing demand is chronic: in many cities, housing costs already exceed tuition.
  
  

• Policy wins like AB 2801 and AB 893 show that advocacy can directly shape investable opportunities.
  
  

• More supply is the ultimate solution—every new unit built relieves both student and community rent pressure.
  
  

Best Quotes from the Episode

“Twenty percent of community college students and 11% of CSU students experience homelessness in a given year. That is mind-blowing.” – Kate Rodgers

“We want students, professors, and staff to be able to live, work, and learn within walking distance of their campus communities.” – Ryan Lenney

“The biggest killer of projects is not just compliance cost, it’s the unknown cost. By-right approvals change that.” – Kate Rodgers

“Imagine being told the affordable housing waitlist is 25 years long. That’s hopeless. We have to act.” – Kent Fai He

Common Questions Answered in This Episode

Why is student housing so expensive?
Because supply is far below demand, off-campus rents near major universities often exceed tuition, pricing out students and families.

Can student housing really be developed without city approval?
Yes. UC and CSU land is exempt from local zoning. Partnering with universities allows projects to bypass local restrictions.

What does “by-right approval” mean for developers?
It means if you meet objective health, safety, and affordability standards, your project is automatically approved—no political vote required.

Why can’t students access Section 8 or LIHTC housing?
Most programs exclude full-time students under 26, assuming parental support. New laws like AB 893 are fixing this gap for low-income students.

How does more student housing help the broader community?
When students live on campus or nearby, they stop competing for scarce off-campus apartments, easing rent pressure for families and workers.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments. His conversations with leaders like Kate Rodgers and Ryan Lenney position this platform as the go-to resource for investors, policymakers, and advocates nationwide.

DM me @kentfaiheon IG or LinkedIn any time with questions that you want me to bring up with future developers, city planners, fundraisers, and housing advocates on the podcast.