Trump Administration Flags Social Security Misuse, 39 States Face Possible Repayment to Foster Kids

Social Security Repayment to Foster Kids: The US government has warned that more than 39 states may soon have to pay back Social Security money taken from foster children. Federal officials say this money was meant to help vulnerable kids but was often used instead to cover normal foster care costs.

The problem comes from how states handle Social Security survivor benefits, disability payments, and Supplemental Security Income also called SSI. These payments legally belong to the child. The money comes from a parent’s work history or from disability support. It does not belong to the state. Still, many state child welfare agencies asked to become the child’s “representative payee.” This role lets them manage the money.

Critics say states used this role in the wrong way. Instead of saving the money for the child’s future needs, many states spent it on food housing and care that the state already had to provide. Federal officials say this breaks the purpose of Social Security rules and hurts foster youth in the long run.

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The Administration for Children and Families under the Department of Health and Human Services sent letters to governors in 39 states. The letters warned that current practices may go against both the spirit and intent of federal law. These warnings opened the door to a major change. States may have to stop this practice and may also need to repay money taken in the past.

Why the Benefits are Important for Foster Kids?

For foster children, Social Security money can be life changing. This money can help pay for school rent health care or basic living costs when a child leaves foster care. Many foster youth age out of the system with little support. Without savings, they start adult life with nothing to fall back on.

Federal officials made it clear that a representative payee must always act in the child’s best interest. If the money is not needed right away, it should be saved for later. Using the child’s benefits to cover foster care bills means the child is paying for their own care. Advocates say this is unfair and harmful.

The financial impact is large. Reports say states have taken hundreds of millions of dollars from foster children over the years. A Social Security Advisory Report published in September said about 27,000 foster children receive Social Security or SSI benefits. This is more than 5% of all children in foster care. Several states saved millions by diverting this money.

ACF Assistant Secretary Alex J. Adams spoke strongly on the issue. He said, “Every earned benefit dollar belongs to these foster youth, not government agencies or bureaucrats.” He also stressed that child protection must stay at the center of child welfare policy.

Growing Pushback and Political attention

Some states have already changed their rules. Idaho stopped the practice under Adams’ leadership. The state now uses the money only for needs that are not already covered and saves the rest for the child’s future. Idaho has joined ten other states that now protect foster children’s benefits. Federal officials say these states show that reform is possible.

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The issue has also drawn strong political attention. In March 2024 Senator Elizabeth Warren raised the topic during a Senate hearing. She said states took at least $179 million from foster children in 2018 alone.

She accused states of using the money for unrelated costs. Warren said some states even screen foster children for Social Security eligibility using data firms. “Those benefits are being used for everything from office supplies to prisons,” she said.