Aging Out of Foster Care: Financial Assistance & Resources

The foster care system is designed to provide care for children whose parents, for whatever reason, are unable to do so. The system isn’t perfect, but it does help thousands of children grow up in a private home.

Then comes adulthood.

At 18, young adults in foster care are forced to move on. It is a difficult position for everyone, foster parents and children as well, but it can be managed with careful planning and access to financial aid and other resources.

“Aging Out” of Foster Care

Children can leave the foster care system in a number of ways: reunification with their parents, adoption, guardianship, and aging out of the system. States are now able to extend foster care up to age 21, while 18 used to be the age of emancipation.

The number of young adults aging out of the foster care system has been on the decline for the past few years. Of the approximately 370,000 children in foster care, about 18,500 age out each year. Many of these young people are still in high school, or only recently graduated.

That means young adults no longer qualify for government benefits for themselves or for their foster parents. That is a harsh reality, but remember that many of the children placed in foster care have experienced neglect, abuse or abandonment. They may not have had a steady, regular educational experience. In short, they may not be prepared for adulthood.

“No child when they turn 18 is an adult,” said Shannon Harding, youth services assistant director with Embrace Families, the leading child welfare agency in Central Florida. “Unfortunately, our children have been under the guidance of so many people in their lives – case managers, therapists, a ton of people supporting them – and they want nothing more than to just be left alone. So, they push us away, and we do what we can to prepare them. Oftentimes, they don’t have realistic plans, as much as we prepare for them.”

Realistic plans, of course, include finding housing, a job and continuing their education, all of which are complicated by their background.

Foster Care “Aging Out” Statistics

It’s important for foster care children to have a plan in place because the odds are stacked against them. Youth who age out of foster care belong to one of the most vulnerable and at-risk groups in America. With nearly 20,000 youths aging out of the system annually, that is a significant group:

• Almost half won’t graduate from high school or be able to pass their GED.
• High school dropout rates are three times higher for foster youth.
• One in four exhibit signs of post-traumatic stress disorder.
• 20% will become instantly homeless.
• 60% of males will be convicted of a crime.
• 50% of foster children have no income within their first four years of aging out, and those who do have an average annual income of $7,500.
• Between 3% and 10.8% of foster care alumni have a bachelor’s degree.

3 Financial Hurdles in ‘Aging Out’

Ideally, young adults have support from their parents financially, as in helping with college expenses or housing, and emotionally, as in providing guidance with “adulting” their way into society.

While many foster parents are caring and willing to offer support, emancipated youth are often on their own. Becoming financially independent is challenging for anyone, but foster youth have several major hurdles.

1. Lack of Financial Role Models

A generation ago, parents would teach children how to open a passbook savings account or balance a checkbook. Not only are foster children often without stable role models with financial skills and knowledge, but the world has changed completely within a generation.

Everything is automated now, from paying bills to moving money from different accounts to tracking your assets. Your phone may provide more information and guidance than the adults in your life, but it is still important to be careful where you place your trust. Scammers have feasted on the changes in technology.

2. Inability to Attend or Afford Higher Education

Four years after aging out of foster care, half of young people had zero or limited income while only 2 to 10.8% earned a bachelor’s degree. College may not be for everyone – trade schools and apprenticeships also prepare people for good-paying jobs – but a college degree is still a pathway into the middle class for many people.

It isn’t free, though. Grants and scholarships can help with the costs. Student loans can take years to pay off, but are still worth the investment for many ambitious young people.

3. More Likely to Face Financial Hardship

Many foster youth don’t receive much training in the area of financial literacy. That can lead to trouble. All of the factors that have affected the economy in the past few years – inflation, unemployment rates, high interest rates – will be toughest on young people without reliable housing, education or job skills.

Some 25% of 19-year-old foster youths reported higher incidences of health problems, including hospitalization, mental health, illness, injury and drug abuse. Nearly a third of fostered youth experience mental health disorders, including PTSD, depression, and alcohol or substance abuse.

Extended Foster Care Program

Historically, foster care ended at age 18. Now, every state except Oklahoma offers some services beyond that age and offers some benefits until age 23 due to the Family First Prevention Services Act of 2018. Due to the coronavirus pandemic, Congress allowed temporary expansion of services up to age 26.

Because so many leave foster care poorly prepared to pursue higher education or begin a career without adult guidance, extended foster care allows them to remain or re-enter care after turning 18, giving the child welfare system more time to help them make the transition and develop financial goals and skills.

A 2019 study by Child Trends indicates that those in extended care compared with those who exited foster care at 18 are:

• Three times more likely to be enrolled in school.
• 4 times more likely to be receiving educational aid.
• Three times more likely to be disconnected from school and work.

Resources Available in Extended Foster Care

Extended foster care resources vary from state to state but are designed to help young adults meet a variety of needs, such as:

• Academic: applying for college, getting a tutor or securing financial aid.
• Employment: finding jobs, writing resumes, submitting applications and understanding employee benefits.
• Health care: enrolling in Medicaid and selecting a health-care power-of-attorney.
• Home management: understanding meal planning, housekeeping and house maintenance.
• Financial: developing a budget, opening a credit card and protecting a credit score.
• Life skills: obtaining a driver’s license.

Toolkits to Help With ‘Aging Out’ Transition

The U.S. Department of Education provides a Foster Care Transition Tool Kit. Like many government documents, it’s very detailed and difficult for a teenager to comprehend. Federal law requires child welfare agencies to begin working with foster youth at age 14 to develop plans for transition into adulthood.

The plan is supposed to be completed 90 days before they age out of foster care. It’s hard to believe anyone that young can grasp how Medicaid works, what a credit score is, how to balance a budget or what they will need to sign a lease.

Foster Club has their own transition tool kit with much more direct guidelines. The tool kit is meant for foster youth, but these principles could be applied to anyone moving out of the house for the first time. At the minimum, you’ll need a plan in place for finances, housing, health care, education and career.

Here are some recommendations that any child leaving home could learn from.

Financial Considerations for ‘Aging Out’ Foster Children

Get a bank account with a checking and a savings account before you move out. Have a source of income and list all the types of aid you might qualify for such as social security, housing support, food stamps, financial aid for college, etc.

Next, create a budget listing your expenses (rent, food, utilities, transportation, clothing, medical care), and how much money you’ll need to cover them. Remember to put some money away into your savings account, so you can start building an emergency fund to cover unexpected expenses.

Those living on their own the first time often have to learn the hard way that there are consequences like overdraft fees to spending money they don’t have, Harding said.

“If you buy this hamburger for $3 and you only have $1.50 in your account, you’re going to end up paying $25 for a hamburger,” Harding said. “Some of those lived experiences are what happens to them when they age out.”

Housing

Calculate how much it would cost to rent your own space. Living with roommates can cut the cost of living in half. The total cost of housing should never exceed 35% of your monthly income. The John F. Chafee Foster Care Independence Program provides housing vouchers for foster youth making the transition to independence. Also, look into transitional housing programs offered by your state.

Federal law provides housing assistance to foster youth transitioning to independence. Youth also may be eligible for state-administered transitional housing programs. Forms of assistance from the U.S. Department of Housing and Urban Development include a subsidized unit in a building owned and managed by the housing program, vouchers providing monthly rental assistance, or a stipend for living expenses. Hud-approved housing counselors also may provide assistance.

In a housing crisis, homeless and runaway youth can text SHELTER and their ZIP code to the phone number 99000 from anywhere in the nation and receive a response from a local shelter. ShelterListings.org offers a complete list of shelters in each state.

Health Care

Youth formerly in foster care are eligible for Medicaid up to age 26, thanks to the Affordable Care Act. You are eligible for full Medicaid coverage regardless of your income or whether your state declined to expand Medicaid coverage. However, you are only eligible for Medicaid in the state in which you age out of foster care. If you move to another state, they are not required to give you coverage.

To learn about each state’s policies, contact the State Medicaid Office. Those dealing with a crisis or emotional issues may text the National Alliance on Mental Illness (NAMI) Crisis Text Line: 741741 or call 1-800-950-6264 to speak to a trained crisis counselor. In addition, the Substance Abuse and Mental Health Services Administration operates a national helpline, 1-800-662-4357, which provides a free, confidential, around-the-clock information service and treatment referrals in English and Spanish.

Education and Career

It’s vital for those exiting foster care to work toward earning a high school diploma or GED if they haven’t already done so. There are a number of resources available to help pay for college, so take full advantage of those. If you live in one of the 24 states that offer tuition waivers for foster youth, you won’t pay a dime for tuition. Another 11 states offer grants or scholarships as a form of tuition assistance.

Apply for financial aid by filling out a Free Application for Student Aid (FAFSA), and you should qualify for a Federal Pell Grant worth up to $6,495. The John H. Chafee Foster Care Independence Program can help you get up to $9,000 with an Educational and Training Voucher (ETV) from your state. Foster Care to Success can link you up with scholarships specifically for foster youth, and there are a number of other scholarships and grants for college students.

College isn’t for everyone. Apprenticeship programs can help you learn a craft and make a career out of it. ETVs can also provide money for career school or training.

How Foster Parents Can Help Transitioning Foster Care Youth

Child welfare agencies like Embrace Families are important, but foster parents are vital to helping youths transition to adulthood with the safety nets and support networks their peers enjoy.

• Train youth to make decisions. Youth in foster care often have no say about big decisions that affect their lives. Give youth plenty of opportunities to make decisions and learn from the results.
• Set high expectations. Give them positive messages about what’s possible for them. Talk about their going to college or starting their own business.
• Don’t delay. Start preparing them for adulthood early. Introduce important concepts like saving money for long-term goals while they’re young. High school is a good place to learn about financial literacy.
• Gradually give them responsibilities. Involve them in setting rules and establishing appropriate consequences for their behavior. As they show they’re able, help them learn and practice adult life skills.

Get Help Transitioning into Financial Adulthood

Let’s face it: Adulthood isn’t easy even if your upbringing has been smooth and stable. Those who’ve aged out of foster care may not know people they can trust to give them sound financial advice.

That’s where InCharge Debt Solutions can provide valuable help. InCharge isn’t only there for people who have gotten into debt trouble. Its free credit counseling services can provide advice about managing your finances that can keep you out of that trouble. You can visit a credit counselor in person or choose online credit counseling if that’s better for you.

So, even if your 18^th birthday wasn’t what you hoped it would be, with the right help, you can have a bright future.