Originally, there were no provisions for any type of benefits to children in the Social Security Act of 1935. But by 1939, Social Security was amended to include payments to survivors of deceased workers, that is, the spouse and the minor children, if any. Then, in 1956, the program expanded to include disability benefits. The same benefits given to deceased workers' surviving dependents were also given to disabled workers' dependents. The reasoning was that when a wage earner died, retired or became disabled, a greater amount of lost earnings needed to be replaced if there were dependents than if there were not.
From 1939 and up to the present day, a minor child of a deceased, disabled or retired (after full retirement age) worker is entitled to a Social Security payment until the age of 18. Benefits stopped at the point the child was not considered dependent, or no longer considered a "child." However, Social Security has been amended to include a "disabled adult child" so that a child over 18 who had been disabled prior to age 18 could still receive child's benefits. The rationale, of course, was that a disabled adult child is presumed to be dependent on parental support.
More amendments came along in 1965, as the Social Security program realized that full-time students over the age of 18 were still dependent on financial support from parents. So the term "child" was given a broadened definition. Child's benefits were extended to full-time students under the age of 22 who were the children of a Social Security beneficiary. Why 22? Because by that time the child could have completed a four-year college education.
The common understanding has been that Social Security benefits for surviving college age children and children of disabled and retired workers is student aid. But in fact they were just extended child's benefits--and very popular, too. By 1977 the benefit was being paid out to almost 900,000 students. By 1981 almost $2.4 billion was paid to children enrolled in college.
The Social Security program's payout of benefits to students was problematical. First, there were abundant overpayments. The payments were not for college, they were because of college. It was reasoned that a survivor child needed help during years of full-time college attendance, but not if attendance was part time, or if the child dropped out. Yet, this could only be monitored by student or parent reporting, and the reports often were not made. In 1978 Social Security estimated overpayments of $300 million. (Over time 75 percent of that was recovered.) Another big problem was that Social Security was under financial pressure, and the cost of student benefits had risen to $2 billion a year.
The popular perception was that these student benefits amounted to federal college aid; this, even though there was plenty of other federal aid available for college. In fact by 1981 federally funded educational loans and grants reached about $7 billion a year. In addition, other aid funds were available from state and local resources. Student assistance was not only widely available, it could be tailored explicitly to the cost of the education and the family financial circumstances.
During the Reagan administration, sweeping cuts were made to the Social Security program. Among them were the elimination of payments to students pursuing higher education who were aged 18 to 21. This was effective in August 1981 and had a three-year phase-out plan. Also, payments were eliminated to elementary and secondary school students over the age of 18, effective August 1982.