Most fosters learn that they were due Social Security years after they aged out with no savings, no deposit for an apartment, and no money for college or a car. Between 22% and 30% of former foster youth experience homelessness during the transition to adulthood, versus about 4% lifetime homelessness in the general population. The long‑running Midwest Study found that 31–46% of youth who aged out had been homeless at least once by age 26. HUD’s review of housing outcomes estimates 11–37% experience homelessness and another 25–50% are unstably housed (couch surfing, doubled up, near eviction).
By almost any measure, these children and youth need and deserve the dollars they have been promised. Decades of data proves that money is a critical part of what it takes for fosters to build the skills needed to live a stable life. By age 26, youth who age out of foster care have 50% lower earnings and 20% lower employment rates than similar young adults with comparable education. Earlier federal work shows low employment persists: roughly three out of five youth aging out are not steadily employed by age 24, and those who work earn significantly less than peers. Summaries of multiple studies report unemployment rates as high as 55–69% for young adults who aged out of care, versus about 10% for same‑age peers in the general population.
Each year, 23,000–25,000 young people age out of U.S. foster care without permanent families. About 20% become immediately homeless at 18, only about half are employed by 24, and fewer than 3% will complete a four‑year degree. Many of these youth leave care “almost alone,” with far fewer financial and emotional supports than their peers.
In any other country, foster youth could sue for that money—but in the United States, they can’t. Because America is the only nation that has refused to ratify the United Nation’s Rights of the Child Treaty, fosters have no standing in court to challenge this practice.
In Minnesota, counties are financially responsible for many aspects of foster care and are explicitly allowed to apply to be representative payee for SSI, survivor, and veterans’ benefits for foster youth in their care. A Star Tribune investigation found that in 2022, about 60 counties received roughly 2.8 million dollars in such benefits on behalf of 600+ children and used more than 2.5 million of it to cover foster‑care costs.
Foster Advocates and others labeled this “counties stealing legally owed benefits” and pushed legislation to stop or limit the practice. New Minnesota rules now at least require notice to the child when counties control their federal benefits and the state is exploring ways to preserve funds for youth instead of using them to reimburse care.
In early 2026, the Trump administration’s child‑welfare officials publicly called this practice an “orphan tax” and told states to stop taking survivor benefits; disability (SSI) benefits are more complex legally and may require Congressional action. Policy groups have proposed dedicated accounts where foster youth benefits are deposited and saved, with oversight, so the money is used for their immediate needs and as a nest egg for adulthood rather than state reimbursement.
The “it’s too complex and fraud‑prone to set up accounts for youth” argument is weak, because Social Security already runs a national payment system for these exact dollars—and we already use similar account structures for other populations at scale. SSA is already safely moving this money every month
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These are existing Social Security and SSI payments, not a new benefit. SSA already
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Determines eligibility, Issues monthly payments to millions of beneficiaries and representative payees via direct deposit or prepaid cards and has fraud‑prevention and audit mechanisms for payees built into its own system. When a county becomes representative payee, nothing new gets created—SSA just routes the same monthly benefit to the county’s bank account instead of to a parent, relative, or other payee. Re‑directing those payments into a dedicated account for the child’s benefit at 18 or 21 is an administrative routing choice, not a brand‑new, untested financial network.
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We already run similar “special accounts” programs. Policy proposals for Fostering Independence Accounts explicitly point out that the U.S. already operates savings/benefit accounts for other vulnerable groups, like ABLE accounts for people with disabilities.
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ABLE accounts: Let states create tax‑advantaged, restricted‑use accounts.Are funded by federal benefits and personal contributions. They are used for allowed expenses like housing, education, and transportation, with existing oversight rules. Experts proposing foster‑youth accounts argue you can reuse these frameworks—either expand ABLE rules or create a similar account type for foster youth using existing federal and state savings‑program infrastructure. If states can already administer 529 plans, ABLE accounts, EBT systems, and payroll direct deposit, it is not technically harder to hold a foster youth’s SSA benefits in a restricted account than to sweep them into a county general fund.
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Fraud risk exists now—and falls on children, not counties. SSA’s own Office of Inspector General has documented misuse of foster children’s benefits by unsuitable representative payees, including relatives and others who diverted funds for their own purposes. Separate SSA/OIG work has found misuse of foster children’s Social Security numbers to open credit accounts and incur debts in the child’s name, leaving youth with damaged credit as they age out.
In Massachusetts, disability advocates documented that the state child‑welfare agency, as representative payee, was diverting 90% of children’s SSA benefits—about $450,000–$500,000 a month—into the state’s general fund, not protecting them from fraud. In other words, the current model is already complex and prone to misuse—it just concentrates control in agencies, not children.
The “complexity” argument ignores straightforward design options. Several practical designs refute the idea that doing this right is too hard: SSA already tracks each child’s benefit record. Federal guidance already requires IV‑E agencies serving as payees to meet with youth, assess needs, and consider using benefits for future needs. Adding a requirement that a portion of each payment be conserved in a state‑designated youth account (released at 18/21) is a policy decision, not a technical leap. Policy analysts propose using or adapting existing account structures (ABLE‑like accounts or new Fostering Independence Accounts) that states can manage with clear allowed uses.
States are already cutting these young people loose at 18–21 and expecting them to survive; claiming they’re too fragile to handle their own SSA funds while simultaneously taking those funds to backfill agency budgets is logically inconsistent. Federal and independent analyses show that states and counties are using foster youths’ benefits as a quiet revenue stream, not because there is no way to get the money safely to youth, but because the law has allowed them to treat it as reimbursement.
HHS/ACF’s recent letters to 39 governors explicitly urge states to stop diverting Social Security benefits and instead preserve them for youth, signaling that the federal government sees this as a policy choice, not a technical impossibility. So when counties say “it’s too complex and risky to build a fraud‑free system to give this money directly to foster youth,” they are ignoring three facts:
SSA already runs the payment and oversight machinery for these benefits,
we already manage similar restricted accounts for other vulnerable groups, and
the current practice has its own fraud and misuse risks—borne by children—while conveniently protecting agency budgets.
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