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Parents give up custody of kids in order to get college financial aid
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Has Achieved Nirvana
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Dozens of suburban Chicago families, perhaps many more, have been exploiting a legal loophole to win their children need-based college financial aid and scholarships they would not otherwise receive, court records and interviews show.

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 custody 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.


https://chicago.suntimes.com/2...-university-illinois


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Posts: 38222 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
Techno-Stud
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This is hardly news. It was pretty common back when I was in college. The financial aid available to an emancipated student far outweighed the financial hit of one fewer dependent at tax time. So prevalent was it that financial aid counselors actually suggested it routinely.


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Posts: 15343 | Location: Plainfield, IL | Registered: 20 April 2005Reply With QuoteReport This Post
Pinta & the Santa Maria
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This generated a few thoughts from me.

We (as a society) tend to go a bit crazy when it involves our kids and college admissions--especially elite college admissions. The VAST majority of happily and successfully employed students in the USA graduates from public universities. A minority of graduates from elite colleges will occupy the corner office.

If you can't afford a 4 year college, start at a 2 year college. Work your butt off, and get a scholarship to transfer and finish your degree at a 4-year. (Note: this is almost exclusively a public school path, since few private colleges will accept much in the way of transfer credits from a 2-year.)

As a society, we need to stop looking down our noses at trade schools. This is a great option for many students who will flounder in a more traditional liberal arts school, and they will end up being able to support themselves. There are scholarships and federal grants (Pell, etc.) for vocational/trade schools, just like for 4-year colleges.
 
Posts: 35428 | Location: West: North and South! | Registered: 20 April 2005Reply With QuoteReport This Post
Minor Deity
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Schools are free to set their own guidelines for financial aid. I am surprised they would go along with this.

Matt, the article suggests the students actually take on a new legal guardian with a lower income. It isn’t just a matter of emancipation.

As a parent who paid full cost for two kids, the third going to a school without tuition, this kind of stuff pisses me off.

Jf


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Posts: 17734 | Location: Maine | Registered: 20 April 2005Reply With QuoteReport This Post
"I've got morons on my team."

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Originally posted by Matt G.:
This is hardly news. It was pretty common back when I was in college. The financial aid available to an emancipated student far outweighed the financial hit of one fewer dependent at tax time. So prevalent was it that financial aid counselors actually suggested it routinely.


This isn't what they're talking about. It's not about giving up the tax deduction. In order for a student to be able to fill out a FAFSA without providing parental income information, the family must formally give the student up to another guardian. This is a significant legal process.

A student cannot simply declare themselves financially independent. Here are the rules:

Federal Definition of Independent Student

You have to be over 23 to be considered independent unless one of a number of very special circumstances apply. One of those is having someone other than your parents as your legal guardian.
 
Posts: 12759 | Location: Williamsburg, VA | Registered: 19 July 2005Reply With QuoteReport This Post
"I've got morons on my team."

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Universities are on the lookout for this kind of stuff. Actually, I'll bet that internal discovery by the University of Illinois is what brought this to light.

Admissions offices are always looking for red flags and inconsistencies. I think I've mentioned the GoogleEarth checks that many (most) schools use when they smell a rat, i.e. a family from a wealthy zip code whose darling is getting a Pell Grant. They examine the family home. When they discover that little Jill who is Pell eligible lives in a $1.5 million suburban mansion, the school declines to offer ANY institutional aid as part of the package, leaving the student with a very big amount of unmet "need" according to the federal formula. Schools aren't powerless. They have tools. The game is on federal and state policies that opened the small loophole.
 
Posts: 12759 | Location: Williamsburg, VA | Registered: 19 July 2005Reply With QuoteReport This Post
Pinta & the Santa Maria
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I'd not heard of schools using GoogleEarth to snoop around. But I'm confused--how would they know that little darling's family lives in a multi-million dollar manse if they aren't listed in the FAFSA as their guardians? Perhaps I'm forgetting the whole god-awful FAFSA process, but I don't recall a question where they asked for your biological parents' information in addition to their guardian's information.

What might be a dead givaway, however, is the zip code and general stats for the kid's high school.

I'm glad to know that at least some schools are trying to catch this sort of stuff.
 
Posts: 35428 | Location: West: North and South! | Registered: 20 April 2005Reply With QuoteReport This Post
"I've got morons on my team."

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The GoogleEarth check is for a different issue (not the guardian scam).

We get applicants from families that have a low enough "income" that they get Pell grants, and the FAFSA reports a low EFC for them. That means we would have to kick in a substantial amount of institutional aid to "meet all demonstrated need." When such a kid comes from an odd zip code, admissions looks at the family home. When they see obvious wealth, they decline to meet all the family's "demonstrated need." In fact, they decline to meet any of it. Evil

Families of this sort don't usually complain, which is another flag that we have correctly identified a cheater.

These are families that have managed to arrange their finances so that their income isn't reported as income on their 1040, and they are probably lying about their assets.

Remember, the family's main residence isn't considered an asset when EFC is calculated. So you can pour as much money as you want into the family homed and still seem poor on the FAFSA.

This is not a large number of people, but it's significant enough that schools want to preserve their aid budget for truly needy families. Hence the GoogleEarth check and the reliance on other forms besides the FAFSA.

The downside of all this is that the aid process becomes even more complex and off-putting to low income and 1st generation students.
 
Posts: 12759 | Location: Williamsburg, VA | Registered: 19 July 2005Reply With QuoteReport This Post
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