Explainer: How America’s foster care system harms children instead of protecting them

By Ali Zeraatpisheh

The United States is experiencing a foster care crisis that is often described as overcrowded group homes, overworked caseworkers, and children waiting for permanent placements.

Yet, this perspective misses the full extent of the problem.

The crisis does not begin when a child enters foster care. It begins much earlier, in the constant monitoring of families and the gradual expansion of a system that now touches millions of homes every year.

The foster care crisis affects far more than just the children who end up in state custody. Each year, millions of families interact with the child welfare system, often without losing their children.

According to data from the US Department of Health and Human Services (HHS), child protective services receive over 6 million reports of abuse or neglect annually, leading to investigations involving more than 3.7 million children.

While most of these investigations do not result in foster care placement, the investigations themselves, home visits, interviews, and the ongoing threat of removal cast a long shadow over entire communities.

At any moment, more than 340,000 children live in foster care. Over the course of a single year, this number exceeds 500,000, according to a 2023 analysis of federal child welfare data by USAFacts.

Across an entire childhood, the system reaches even further. Research cited by Casey Family Programs estimates that roughly one in three children in the United States will be investigated by child welfare authorities before turning 18.

For children from low-income families and communities of color, these chances are much higher.

These figures reveal a system that goes far beyond emergency intervention. Child welfare has become a vast administrative machine affecting millions of lives.

Foster care is no longer reserved for only the most severe cases. Instead, it has become a common consequence of poverty, policy choices, and an overextended system.

The crisis is not only about the children removed from their homes but also about the widespread disruption experienced by families and the trauma that the system reproduces across the nation.

Why does the US foster care system fail children despite billions in funding?

The US foster care system is not a single institution but a complex network of federal rules, state agencies, county departments, family courts, and private contractors. In fiscal year 2023, 175,283 children entered foster care, while 343,077 remained in care at the end of the year.

These numbers reveal a system in constant motion, marked by steady removals and temporary placements. While California, Texas, and Florida record the highest total numbers, smaller states often show higher placement rates relative to population, highlighting widespread strain across regions.

Children are placed in different types of settings. Approximately 45 percent live with licensed foster families who are not relatives. Another 35 percent are placed with relatives through kinship care, while the remaining 20 percent are sent to group homes or institutional settings.

Movement between placements is common: the average child is moved 2.8 times, and 40 percent experience three or more placements. Each move disrupts schooling, damages relationships, and adds to existing mental health challenges.

Time in care often worsens these effects. More than one-third of children who exited foster care in 2023 had spent over two years in the system, and tens of thousands remained for more than three years.

Interventions intended to be temporary frequently turn into prolonged periods of uncertainty, with no clear path toward reunification or permanence.

Overloaded caseworkers further weaken the system. Best-practice standards recommend no more than 15 children per worker, yet many states report averages above 30. Oversight suffers as home visits are delayed, court filings pile up, and decisions are slowed.

High staff turnover compounds the problem. According to the Child Welfare League of America (CWLA), 85 percent of agencies report serious retention challenges, leaving children to cycle through workers who may know little of their histories.

In practice, the foster care system often operates less as a protective service and more as an administrative holding pattern. Children move repeatedly between placements while court timelines extend and agencies struggle to meet compliance demands.

The stability and permanence promised by law remain out of reach for many, replaced instead by prolonged instability that the system itself perpetuates.

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How do federal policies worsen the foster care crisis?

Federal policy has not only failed to solve the foster care crisis; it has helped entrench it. The structure of child welfare funding in the US rewards removal and custody while providing limited and uneven support for keeping families together.

The largest federal funding source, Title IV-E of the Social Security Act, provided roughly $9.5 billion in fiscal year 2023. Less than $200 million of that total went to services aimed at preventing children from entering foster care. Most of the funding reimbursed states after children had already been removed, covering foster care maintenance payments, adoption assistance, and guardianship subsidies. In practice, the system pays most reliably once separation has already occurred.

Programs designed to support young people aging out of care receive far less. The John H. Chafee Foster Care Program for Successful Transition to Adulthood was funded at about $143 million in 2023, a small fraction of overall foster care spending.

Title IV-B funds, which can be used more flexibly for family preservation and kinship care, were reauthorized and modestly expanded in 2025, with an annual increase of roughly $75 million. Even with that increase, IV-B funding remains marginal compared with the scale of IV-E maintenance expenditures.

Between 2015 and 2022, states spent an estimated $68.6 billion in Title IV-E funds on foster care and related services. Historically, only a small portion of this money has gone toward prevention.

Temporary Assistance for Needy Families (TANF) funds, which are theoretically more flexible, contributed about $23.5 billion to child welfare during the same period. In practice, states vary widely in how much of that funding they direct toward child and family services.

Recent reforms have not meaningfully shifted this balance. Only a minority of states have fully adopted the optional prevention provisions under the Family First Prevention Services Act. Even where implemented, the reach remains limited.

In 2023, roughly 18,000 children per month were served through prevention plans, compared with hundreds of thousands cycling through foster care. This contrast underscores the scale of the gap.

Overall, federal funding policy continues to prioritize custodial intervention over family stability. The system reimburses removal far more consistently than prevention, leaving support services fragmented and underfunded. The result is a foster care system in which state intervention is normalized, while meaningful efforts to keep families together remain constrained by design.

What lifelong damage does foster care inflict on youth?

For tens of thousands of young people each year, foster care does not provide safety or stability.

Instead, it often leads to an abrupt transition into adulthood with little support and lasting harm. According to CWLA, more than 20,000 young people age out of the foster care system annually, typically around age 18. Most leave without a permanent family, stable housing, or a reliable safety net.

The consequences appear quickly. Data cited by the Annie E. Casey Foundation show that within one year of leaving care, about half of former foster youth experience homelessness. Within two years, nearly one in four has been homeless at least once.

This rate is roughly four times higher than among young people who were never in foster care.

Economic outcomes are similarly bleak. Research summarized by Casey Family Programs indicates that only about half of former foster youth are employed by age 24. Among those who do work, many earn less than $14,000 a year by age 26, placing them far below the federal poverty line. Financial instability is not a temporary phase but a persistent condition.

Education offers little relief. According to the Jim Casey Youth Opportunities Initiative, only 58 percent of former foster youth graduate from high school, compared with a national average of 78 percent.

Fewer than three percent earn a college degree by age 26, sharply limiting access to stable employment and long-term mobility.

The psychological toll intensifies these disadvantages. The National Child Traumatic Stress Network reports that former foster youth are twice as likely to experience post-traumatic stress disorder as US war veterans. Access to consistent mental health care after leaving foster care is limited, leaving many to cope with complex trauma on their own.

Contact with the justice system is also common. The Pew Charitable Trusts found that roughly one in four foster care alumni enters the criminal justice system shortly after aging out. For many, early adulthood is defined not by opportunity but by instability, surveillance, and exclusion. The harm inflicted by the foster care system does not end at exit; it follows individuals for decades.

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How does foster care create lasting costs for society at large?

The foster care system imposes high and lasting costs on American society, extending far beyond the children and families directly involved. These costs are measurable, ongoing, and largely borne by public institutions. According to estimates cited by the Children’s Bureau, states spend more than $30 billion annually on child welfare services, with most of the funding directed toward foster care maintenance, court proceedings, and administrative oversight rather than prevention or family support.

The downstream effects of foster care further increase public spending. A 2017 analysis by the Chapin Hall Center for Children found that young adults with foster care histories are significantly more likely to rely on emergency healthcare, homeless shelters, and public assistance programs than their peers, placing continued pressure on already strained systems.

Medicaid enrollment among former foster youth remains disproportionately high into adulthood, reflecting long-term health and mental health needs linked to early instability.

The justice system also bears additional costs. Research published in Child Abuse and Neglect shows that individuals with foster care histories are overrepresented in local jails and state prisons, raising correctional expenditures while providing little evidence of reduced recidivism.

Education systems are affected as well. High school dropout rates among foster youth contribute to lower workforce participation and reduced tax revenue over decades, reinforcing cycles of public dependency.

Together, these outcomes reveal a system that transfers instability from families to public institutions. Rather than resolving social risk, foster care redistributes it across healthcare, housing, education, and criminal justice systems, generating long-term societal costs that grow with each new cohort.

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