Parents know all too well the huge financial responsibility of putting a child through college. Whether they currently have a child in college, are saving for college or are currently battling their own student debt, the cost of higher education is causing many parents to go to great lengths to ensure their children are able to get financial aid, regardless of their own personal wealth. In fact, some wealthy parents are actually giving up legal guardianship of their college-bound teens so make them eligible for financial aid.
According to two separate reports, one done by ProPublica and another by The Wall Street Journal, some parents are relinquishing legal guardianship of their children, usually when they are juniors or seniors in high school, to relatives or friends so they can have a much lower income to claim on financial aid forms. This typically allows the student to qualify for state, federal and university aid regardless of their parents' income.
Wealthy parents are transferring legal guardianship of their college-bound children to relatives or friends so the teens can claim financial aid https://t.co/ksFyzJumAJ— The Wall Street Journal (@WSJ) July 30, 2019
The WSJ found one case where one student who came from a wealthy family was only required to declare $4,200 in income from their summer job despite the fact that their parents owned a home worth over a million dollars. That student then obtained close to $47,000 in scholarships and federal Pell grants towards their $65,000 annual tuition to a private University.
Although the practice is legal, the Education Department is now investigating, according to the Journal.
"It’s a scam," Andy Borst, director of undergraduate admissions at the University of Illinois at Urbana-Champaign told ProPublica. "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."
.@ProPublicaIL reporters found more than four *dozen* instances of parents giving up legal custody of their children so they could then apply as "independent" on their #FAFSA to qualify for need-based grants and aid they'd otherwise couldn't get: https://t.co/4pMSBquFk5— ProPublica (@propublica) July 30, 2019
ProPublica points out that in cases like this, students who don't really need financial aid could be taking valuable grants from those who do need it. They found that in Illinois last year, about 82,000 students who were eligible for the Monetary Award Program grant didn't receive it because there wasn't enough money. This grant can be for as much as $5000 and is awarded on a first-come, first-served basis, the report states.
Both reports have focused on Illinois but suggest this practice could be happening around the country. In light of the recent 'Varsity Blues' college admissions scandal, it seems there needs to be a major overhaul in the University and College admissions process to ensure those who are deserving and in need are actually getting the help required to attend college.
'It’s not like these families are close or on the tipping point" Borst said of many of the families who are relinquishing guardianship to ensure their student is eligible for the aid. "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?"