A New Deal for Young Adults: Social Security for Students

This post is based on a brief written for the National Academy of Social Insurance, read the entire brief here.

As graduation season commences, President Obama and other policymakers have called for efforts to increase college completion rates, especially for disadvantaged students. To help achieve this goal, Congress and the administration ought to look to a program with a strong historical record of aiding students: Social Security.

Social Security already provides support to the children of parents who have retired, died, or become disabled up through the child’s nineteenth birthday at the latest. From 1965 to 1981, Congress extended these benefits to age 22 if the child was enrolled in a form of higher education. Research has shown that these Social Security “student benefits” aided college enrollment and completion amongst low-income and minority young adults.

The student benefit program was terminated in large part because of the belief that higher education had become more affordable for disadvantaged youth. Now, nearly three decades later, there is a strong case for restoring these student benefits as part of broader Social Security reform by the Obama administration and Congress.

First, higher education is even more important in today’s labor market than it was when student benefits were terminated in 1981—workers with only a high school education earn lower wages relative to college graduates compared to 30 years ago. Yet higher education now costs far more and financial aid covers less of that cost. 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 detrimental to a student’s ability to afford college costs.

Social Security student benefits would thus 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. It is important to note, however, that these student benefits are more than direct educational aid (and certainly not a replacement for increased financial aid); they are payments made as part of the family wage protection function of Social Security.

It may seem unusual to be proposing an expansion of Social Security at a time when most analysts in Washington are searching for budget cuts. But while the benefits both for students and the overall economy of increasing college enrollment and completion are great, the cost of restoring student benefits is quite modest. (It would, for example, represent just $35 more per year for a worker earning $50,000, split between the employer and the worker).

According to a recent national poll commissioned by the Rockefeller Foundation and the National Academy of Social Insurance, 78% of Americans would be in favor of restoring student benefits. Moreover, discussion groups with young adults show that young Americans are also very supportive of these benefits, even if they think that they will not need the benefits themselves.

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. Doing so would not only help disadvantaged students obtain higher education, but would also reaffirm the intergenerational compact that Social Security represents.

Today Friday, May 14th, the National Academy of Social Insurance will host a briefing on Capitol Hill to examine the case for restoring the student benefit to Social Security.

You can watch a livestream of the briefing below from 10am-11:30am.

Free TV : Ustream

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future