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Study Considers Social Security Benefits for Students

  • Published: 2010-05-24 : Author: National Academy of Social Insurance
  • Synopsis: Social Security also pays benefits directly to children under 18 who have lost parental support because of death or disability.

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A New Deal for Young Adults: New Study Considers Social Security Benefits for Students.

In the midst of graduation season, President Obama has called for initiatives to increase college completion rates, especially for disadvantaged students. To help achieve this goal, policymakers could look to Social Security, which has a strong record of aiding students, according to a brief (PDF) released today by the National Academy of Social Insurance (NASI).

Although Social Security is best known for providing retirement security for older Americans, it also pays benefits directly to millions of children under the age of 18 who have lost parental support because of death or disability. This new brief (PDF) makes the case for extending Social Security benefits until age 22 when children of deceased and disabled workers are enrolled in college or vocational school.

"It may seem surprising to offer ways to improve Social Security at a time when many of us are focused on cutting deficits," said Virginia Reno, Vice President for Income Security at NASI. "Yet, it is critically important to consider the adequacy of Social Security benefits for America's families and seniors at the same time that we develop solutions to balance the system's long-term finances."

In the past, Social Security paid benefits to student children until age 22. Legislation in 1981 ended the benefits, in large part because of a belief that higher education had become more affordable for disadvantaged youth.

Now, nearly three decades later, higher education costs far more and financial aid covers much less of the cost than when the benefits were terminated. After adjusting for inflation, the average cost of a year's tuition, room and board in a public four-year college has more than doubled, reaching about $15,200 in 2009, while the average Pell grant (just under $3,000 in 2009) had almost no more purchasing power than 30 years ago.

"Together these trends make students all the more dependent on their parents for support, and make the loss of a parent's income all the more devastating to one's chances getting a college education," said Alexander Hertel-Fernandez the author of the brief and researcher at the Economic Policy Institute.

Social Security student benefits would help address the problem of college affordability and completion for those students who have either a deceased or disabled parent-students who are disproportionately minority and low-income.

The actuarial cost of such a student benefit would be modest - 0.07 percent of taxable payroll over the next 75 years, according the NASI report, Fixing Social Security: Adequate Benefits, Adequate Finances. For a worker making $50,000, the cost would be $35 more in Social Security taxes a year, or $17.50 each from the worker and employer.

Americans are willing to pay for such benefits through Social Security. Fully 78 percent of Americans said they favored this option in a recent poll sponsored by NASI and the Rockefeller Foundation.

"The loss of income from a disabled or deceased parent poses a substantial risk to a student's continued education. This risk ought to be addressed once again by Social Security," said Hertel-Fernandez. "Doing so would help disadvantaged students obtain higher education and would reaffirm the intergenerational compact that Social Security represents."

Financial support was provided by the Rockefeller Foundation's Campaign for American Workers Initiative. The Initiative supports new rules and new tools for the 21st Century economy through innovation products and policies to increase economic security within the U.S. workforce, particularly among poor and vulnerable workers. The work also receives support from the Ford Foundation as part of its initiatives on Economic Fairness and Opportunity, which focuses on promoting public support for Social Security reforms that increase benefits for low-wage workers.

The National Academy of Social Insurance is a nonprofit, nonpartisan organization made up of the nation's leading experts on social insurance. Its mission is to promote understanding of how social insurance contributes to economic security and a vibrant economy.


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