With no mentors, former foster children face scams, financial distress

Eight years ago, a man received a call from his estranged father, who had abandoned him years ago at a foster care facility in Yongsan, central Seoul, following a divorce.

Kang Hyun-joong (pseudonym) poses during a field trip following his placement in foster care with his brother at the age of 12. He currently works as a barista and studies English to become an engineer in the United States. [JOONGANG ILBO]

Eight years ago, a man received a call from his estranged father, who had abandoned him years ago at a foster care facility in Yongsan, central Seoul, following a divorce.

At the time, Kang Hyun-joong, who goes by a pseudonym, was nearing his 18th birthday, which meant he would soon transition out of the foster care system and receive a substantial subsidy to find a place to live.

“If you give me your subsidies, I will turn them into a fortune for you," Kang's father said. "Let me handle the money since you lack financial sense.”

Kang agreed to his father’s proposal and handed over 8 million won ($5,860), which included a lump-sum housing subsidy and the donations he had saved in foster care.

He never saw the money again.

“I think he used the money to pay off his debts and cover living expenses," Kang said. "I have also heard of parents who leave their children in the child welfare system temporarily to gain access to subsidies.”

Kang hangs out with his friends at indoor survival game facility he visited last January. [JOONGANG ILBO]

In Korea, local governments offer subsidies to 18-year-old youths aging out of foster care, including those in group homes and foster homes, to help them find housing.

The amount varies by region, with Seoul providing the highest at 20 million won, followed by Gyeonggi, Daejeon, and Jeju at 15 million won.

Since 2019, young adults also receive a monthly subsidy — now 500,000 won — for five years after leaving the child welfare system.

They can also access their Child Development Account, which holds donations from private donors during their time in foster care to pay for tuition, vocational training and living expenses.

Finding housing and navigating the world can be overwhelming for any teenager — but it’s even more so for teens who lack real-life financial education, putting them at a higher risk of being scammed.

Another person out of foster care who goes by the pseudonym Park Ji-yeon lost all her savings to her long-time ex-boyfriend.

“He said he needed deposit money for us to live together," she said. "I gave him 8 million won, only for him to disappear with my money and another woman.”

Park said she feels like “an adult physically but mentally like a child.”

"I don't know how to use or save up money because no one taught me how to manage money,” said Park, who is now 24.

Many former foster youths fall victim to scams involving housing or secondhand goods.

“I just signed the contract as told, and I am now left with a huge debt,” said a young woman who left the foster care system in 2019.

In 2021, she took out loans and spent all her savings and subsidies to pay a 100 million won deposit on a house that a real estate agent claimed was a “bargain.”

He assured her that if she paid 10 percent of the deposit upfront, loans would cover 80 percent, and the rest could be paid with monthly rent.

His words proved far from true. The studio flat allowed loans only up to 40 percent of the house price.

“I have no family member to help me. I am scared,” she said. She is now suing to reclaim her deposit.

Some young adults squander their money on gambling or games, while others get cheated by buying used cars.

“I have seen many young adults become ‘car poor’ because they bought a car without knowing the costs of maintenance, insurance and repairs,” said Hwang Min-joo, chief of the South Gyeongsang branch of Good Neighbors, an international humanitarian development NGO.

“Car poor” refers to people whose financial status significantly deteriorates after buying high-end cars.

“I have also heard stories of youths aging out of foster care going bankrupt after splurging on luxury items and plastic surgeries,” Hwang added.

Critics urge the implementation of programs to teach aged-out youth practical life skills. Seven out of 20 young adults recently interviewed by JoongAng Ilbo stressed the importance of financial and employment education for self-sufficiency.

“What’s most frustrating is that I have no adult to teach me life skills I can’t find online, like interview etiquette and what to watch out for when signing a lease,” said a former foster child. "I am desperate for a chance to meet a role model — someone who can never be bought with money.”

Another former foster youth said, "Instead of just handing me fish, I need lessons to learn how to fish.”

The government annually holds classes to help foster children in childcare facilities and group homes become self-sufficient. Since 2011, courses on money management and career exploration have been offered.

A 2021 survey of 3,104 young people in their first to fourth year of aging out of foster care conducted by the Korea Institute for Health and Social Affairs found they attended an average of 1.75 out of five classes focusing on self-reliance. For the two courses on employment, the average was only 0.53

Participants criticized the classes as mere formalities, with foster children from elementary schools to high schools placed in the same room to take lectures.

“Most classes are just about filling in time and taking photos at the end. Almost no one pays attention because the content is nearly identical each time,” a former foster child said.

Experts worry that financial distress due to overspending or fraud can lead young adults to feel isolated and depressed, potentially resulting in a vicious cycle of crime.

"Contrary to isolated young people who live with family, former foster youth who cut off contact with support organizations are more likely to disconnect themselves socially, financially and administratively,” said Byun Guem-sun, youth policy research leader at the Seoul Institute.

“Social isolation could lead to poverty in middle age or old age" or even "lonely deaths," he said, referring to individuals who die alone, with their corpses discovered only after a certain period.

Byun stressed that life mentors are crucial for young adults aging out of foster care to guide them through the complexities of life.

“Young people aging out of foster care also struggle to judge right from wrong because their social network only includes friends in foster care, with no trustworthy adults nearby,” Byun said.

BY JEONG SAE-HEE, KIM SEO-WON, PARK JONG-SEO, WOO JI-WON [woo.jiwon@joongang.co.kr]