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Rich Parents Are Giving Up Custody of Their Kids So They Can Get Financial Aid

Students

Dozens of well-off families in Chicago are transferring guardianship of their kids to friends and relatives so they can qualify for financial aid and college scholarships, ProPublica Illinois reports.

Parents are exploiting a legal loophole by giving up guardianship of their children to friends and relatives during their junior year of high school, which allows the students to declare themselves financially independent so they can qualify for various aid programs, according to the report.

“It’s a scam,” Andy Borst, who oversees undergraduate admissions at the University of Illinois at Urbana-Champaign, told the outlet. “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.”

ProPublica found nearly four dozen petitions for such guardianships in just one Illinois county over the last 18 months. Its ongoing investigation has already found similar petitions in five other counties.

Illinois University tries to crack down:

Borst told the outlet that the University of Illinois has identified 15 applicants who obtained a legal guardian that made them qualify for financial aid. Borst said the university told three students halfway through last school year that their 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 school is cracking down and now asking students who recently entered into a guardianship whether they have contact with their families, who pays for their health insurance, and other related questions.

“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?”

Other universities launch investigations:

A spokesperson for the University of Wisconsin-Madison said in response to the report that the school will review certain cases and adjust financial aid awards if it determines the student receives financial support they don’t disclose on their applications.

University of Missouri spokesman Christian Basi told the outlet that the school is investigating whether guardianships have been filed “simply to try and gain financial advantage.”

“We are and would be extremely disappointed with anyone who would try to change their information with the sole purpose of taking money from a need-based program when they would typically not be eligible,” he said.