HHS has released a new report on youth in foster care focusing more specifically on their capacity to deal with the range of financial issues and barriers they will experience once they leave or “age-out” of foster care.

The research Supporting Youth in Foster Care by HHS and partners the Urban Institute and Chapin Hall focused on financial literacy and asset building. What they found is not a surprise to some program administrators and caseworkers.

The findings for this group indicate:

  • A lack of financial support because they lack the parental financial support that many of their peers have;
  • A lack savings because accumulating meaningful savings before emancipation is difficult; and
  • Less exposure to financial stability and healthy financial behaviors.

Surveyed youth believed the program could be improved by offering more follow-up support following financial education, and they identified having an income as a key factor in their ability to save.

In addition to calls for greater evaluation and research the paper calls for (below is direct abbreviated quote):

Integrated versus stand-alone programs. IDAs and financial education can and do exist as standalone programs for youth in foster care, but they often are integrated with other services. Whether or not these programs are aligned with education, employment, or housing programs may affect the degree to which youth benefit, given the complex needs of youth in foster care.

Target youth and their unique needs. Youth in foster care have specific attributes and needs that are important to consider when designing and evaluating asset-building and financial education programs. Many of these youth, particularly those who are younger, may be less likely to have a steady source of income; programs may need to offer extra incentives for participation in order to enable them to save.

Serving youth or the adults in their lives. Youth may not be the only, or even the preferred, recipients of financial literacy interventions. As explained above, youth in foster care may lack adequate exposure to and instruction in healthy financial behaviors. It must be determined whether this is best addressed by serving youth themselves or by training service providers, foster parents, mentors, or other adults in financial literacy so that they can better guide youth—or by doing both.

Involvement of financial institutions. IDA programs and financial access programs may need to partner with financial institutions so that youth can open bank accounts that meet their needs. The Foster Forward program in Rhode Island partnered with Citizens Bank for its IDA program, and program staff feel this has been important to the success of their program. These experts and others believe it is important for programs to learn how to make the business case for youth bank accounts to potential financial institutions partners. Some programs have faltered without necessary connections with financial institutions.

Intended outcomes. General asset-building programs for low-income individuals tend to set goals of large savings and large asset purchases. Programs for youth in foster care may need to establish goals that are more realistic for these youth, who have little extra money to save. It is possible that programs can better serve youth by focusing on increasing their financial knowledge, improving financial habits, raising credit scores, or boosting psychosocial and health outcomes, rather than on amassing large savings and assets.