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- Sep 19, 2018
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So here's the latest-uncovered scam by rich families to get their kids into college: giving up custody of their children so that the parents' prodigious income and assets aren't considered and the student is able to qualify for financial aid intended for low-income individuals:
Coming months after the national “Varsity Blues” college admissions scandal, this tactic also appears to involve families attempting to gain an advantage in an increasingly competitive and expensive college admissions system.
Parents are giving up legal guardianship of their children during their junior or senior year in high school to someone else — a friend, aunt, cousin or grandparent. The guardianship status then allows the students to declare themselves financially independent of their families so they can qualify for federal, state and university aid, a ProPublica Illinois investigation found.
“It’s a scam,” said Andy Borst, director of undergraduate admissions at the University of Illinois at Urbana-Champaign. “Wealthy families are manipulating the financial aid process to be eligible for financial aid they would not be otherwise eligible for. They are taking away opportunities from families that really need it.”
While ProPublica Illinois uncovered this practice in north suburban Lake County, where almost four dozen such guardianships were filed in the past 18 months, similar petitions have been filed in at least five other counties and the practice may be happening throughout the country. ProPublica Illinois is still investigating.
Borst said he first became suspicious when a high school counselor from an affluent Chicago suburb called him about a year ago to ask why a particular student had been invited to an orientation program for low-income students. Borst checked the student’s financial aid application and saw she had obtained a legal guardian, making her eligible to qualify for financial aid independently.
The University of Illinois has since identified 14 applicants who did the same: three who just completed their freshman year and 11 who plan to enroll this fall, Borst said.
ProPublica Illinois found more than 40 guardianship cases fitting this profile filed between January 2018 and June 2019 in the Chicago suburbs of Lake County alone. The parents involved in these cases include lawyers, a doctor and an assistant schools superintendent, as well as insurance and real estate agents. A number of the children are high-achieving scholars, athletes and musicians who attend or have been accepted to a range of universities, from large public institutions, including the University of Wisconsin, the University of Missouri and Indiana University, to smaller private colleges.
Borst said the university told the three students midway through last school year that their university-based financial aid would be reduced. “We didn’t hear any complaint, and that is also a big red flag,” Borst said. “If they were needy, they would have come in to talk with us.”
The university now asks more questions of students who have recently entered into a guardianship, including whether they have contact with their parents, who they live with and who pays for their health insurance and cellphone bill. The questions have deterred some families from continuing to seek university aid, Borst said.
He said the university has alerted the U.S. Department of Education and officials at the Illinois agency that administers state financial aid, the Illinois Student Assistance Commission. An ISAC spokeswoman said the agency has not yet been told about a specific case, but that it would alert the state attorney general and the U.S. Department of Education if necessary. A U.S. Department of Education spokesman said he could neither confirm nor deny current or potential investigations.
When filling out the application for financial aid, called the Free Application for Federal Student Aid, or FAFSA, students have to prove formal separation from their parents to qualify as an independent. One of the few ways to do that is through a legal guardianship change. Students cannot just declare financial independence — even in cases where parents are able to pay but refuse to do so, Borst said.
According to the U.S. Department of Education website, “a student in legal guardianship does not need to report parent information on the FAFSA form because he or she is considered an independent student.” Independent students are evaluated for financial aid based on their own income and resources and not that of their parents.
“It’s not like these families are close or on the tipping point” of being eligible for the aid, Borst said. “I don’t know how big this is, but I hope we can nip this in the bud now. … If it is legal, at what point is it wrong?”