Chapin Hall

Financial Benefits of Extending Foster Care Outweigh Costs to Government

Each year, approximately 20,000 young people age out of foster care in the United States. The Fostering Connections to Success and Increasing Adoptions Act of 2008 gave states the option of extending federally funded foster care to age 21.  As a result of this legislation, more than half the states currently allow young people to remain in foster care until their 21^st birthday.  One of the factors states that have not yet opted in to this policy might consider are the relative costs and benefits of extending the age of eligibility for foster care from 18 to 21.

What We Did

We estimated the relative costs and benefits of extending foster care to age 21 using data from a variety of sources, including the Midwest Evaluation of the Adult Functioning of Former Foster Youth (the Midwest Study), the Illinois Department of Children and Family Services, (DCFS), the 1988 National Education Longitudinal Study (NELS), and the U.S. Census Bureau. In doing so, we took  advantage of the fact that prior to the enactment of this legislation, Iowa and Wisconsin typically discharged youth from foster care around their 18th birthday whereas Illinois was one of the few jurisdictions where young people routinely remained in foster care until age 21.

What We Found

We found that the financial benefits of extending foster care—both for individual youth and for society—outweigh costs to government by a factor of approximately 2 to 1.  This finding was largely driven by the fact that allowing youth to remain in care until age 21 could lead to a significant increase in educational attainment, which in turn would result in significantly higher lifetime earnings.

What It Means

If states that have not already done so adopt a policy of allowing young people to remain in foster care until their 21st birthday, the potential benefits to foster youth and society will more than offset the costs to government.