Last week the Senate Caucus on Foster Youth held a panel presentation and discussion on, Financial Literacy and Consumer Credit Issues facing Transition-Age Youth. Participants included: Carol Behrer, Executive Director of the Youth Policy Institute of Iowa (YPII) a state organization focused on improving youth policy and practice, particularly as it relates to system-involved and other vulnerable or disconnected youth; Eddye Vanderwaak, a Child Protective Worker with the State of Iowa Department of Human Services and formerly in foster care; Clark Peters, PhD, MSW, JD is an associate professor at the University of Missouri School of Social Work and Truman School of Public Affairs.
Much of the discussion focused on some individual state and local strategies to better improve financial literacy including understanding of the credit system as it applies to young people leaving foster care. The discussion included past effort of the Jim Casey Initiative that involves the use of individual saving accounts (IDAs) that combine a donation and establishment of savings accounts for youth in care with ongoing financial education and guidance including discussions of budgeting, credit ratings and fiscal planning.
Although touched on only in passing, the Consumer Financial Protection Bureau (CFPB) has provided several resources that can assist in the strategies.
The Bureau (targeted by some in Congress for elimination) released a number of resources since 2014 including action letters for child welfare caseworkers to send to credit bureaus if they find errors on the credit reports of the children and youth in their care.
Title IV-E requires state child welfare agencies to ensure that youth in foster care who are 16 and older receive a free copy of any credit reports annually. The law also requires that the agencies ensure that youth in care get assistance in interpreting and resolving any inaccuracies in the reports. The CFPB has published three types action letters based on the circumstance: when a credit report should not exist for minors; the credit report has errors from before the youth turned 18; and the credit report has errors for foster care youth over 18.
The CFPB has also published tip sheets for parents and foster care caseworkers to help young people to start and maintain good credit. For caseworkers, the tip sheet provides instructions on how to check the credit records of youth in foster care and how to respond if there is an error on a credit report or evidence of identity theft. For parents, the tip sheet explains how they can check to see if their children have a credit report and what to do if they believe their children’s credit has been compromised. Copies of the tip sheets are here.