The Fleecing of Foster Children: How We Confiscate Their Assets and Undermine Their Financial Security

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The Children’s Advocacy Institute, First Star

About 30,000 of the nation’s foster children age out of the system each year, most often at age 18. They are expected to become independent, self-sufficient and contributing members of society with little or no assistance from others.

According to this report, the foster care system creates huge problems that make the expectations unrealistic. Only about 3 percent of children in foster care ever earn four-year degrees, and by age 24, less than half of foster care “alumni” are employed.

Children in foster care are more likely to be victim to identity theft, and many do not even discover that they had been targeted until they leave foster care and are applying for a student loan, apartment, or car and discover their credit has been destroyed.

Many children in the foster care system quality for Old Age, Survivors, and Disability Insurance Benefits Program (OASDI) and/or the Supplemental Security Income for Aged, Blind and Disabled (SSI) program, but can’t claim the benefits, according to this report.

Underage beneficiaries are required to have an adult representative payee, which often can’t be provided for a foster child, so the benefits are confiscated.

Even those who do get benefits are given odd restrictions. For example, they are not allowed to accumulate resources that exceed $2,000, so in essence they are being taught not to save money. The $2,000 figure was put in place in 1989 and has not been adjusted since for inflation.

One or more of these situations intertwined can result in a lifetime of poverty. Another problem is the state and county social services budgets have been reduced in recent years, and face more cuts as a result of the struggling economy.

According to the organizations authoring the report, the states should take more responsibility for foster children. “States should be required to check into youth’s credit records and repair when necessary.”

The report recommends passage of the Foster Children Self-Support Act, which would safeguard some of foster children’s Social Security benefits, creating a basic safety net for when they age out of foster care.

“Just as parents work hard to raise children who will become self-sufficient, we should work hard to prepare foster youth to have the same capabilities.”

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