Foster youth say bank account access is a missing piece in their transition to independence

Youth aging out of foster care face significant challenges and rely on the Texas Department of Family and Protective Services (DFPS) to sufficiently prepare them for independent living. An important part of the transition to independence is financial literacy. Bank accounts allow people to accumulate assets and build credit, which is key to establishing and maintaining financial stability. In our conversations with youth who have aged out of foster care, they felt they lacked essential financial literacy skills, specifically, access to and knowledge of checking and savings accounts. The data supports what young people report.

The largest study that includes data on foster youth bank accounts is the Midwest Evaluation of Adult Function of Former Foster Youth (2007) which found that only 52% of former foster youth aged 21 had a checking or savings account compared to 81% of general population youth of a similar age. A more limited 2021 study of a smaller group of former foster youth found more encouraging results, showing that 72% of youth aged 18+ had bank accounts. However, these youth were still behind their general population peers. A 2015 study noted that only 23.4% of foster youth aged 16 – 21 reported receiving any budgeting or financial management services through their Independent Living Program. 

Policymakers can help by making it a priority to ensure foster youth have financial literacy skills, as well as bank accounts when they age out of care. Although a 2017 study found that 45 of the 47 states surveyed reported providing assistance with opening bank accounts, these programs are not mandatory and are far too often ignored. Data from various states also indicate that success is limited due to several factors including insufficient training for resource providers, skepticism/distrust of financial institutions among foster youth, lack of program accountability, and disjointed approaches to implementation. The study suggests that to ensure that foster youth can “access and establish key financial products like checking and savings accounts,” there must be “explicit expectations and procedures.” 

It is time for Texas to ensure all youth aging out of care are equipped to become financially independent — the first step of which is having a bank account. While Texas legislators have filed bills in past sessions to create pilot programs for facilitating financial independence by incorporating the provision of bank accounts, most recently with HB 2614 in 2019, none have passed. Texas Appleseed hopes to work with policymakers this upcoming session to pass a pilot program that would test the best way to provide bank accounts for youth aging out of care with the goal of one day implementing it for all youth who age out of care. 

Bank accounts are a foundational part of financial independence. Codifying a requirement to create programs that establish bank accounts for foster youth and have accountability measures to track outcomes is a logical next step. We hope Texas leadership will prioritize this goal to support foster youth as they transition from state care to financially independent living.