Crawling through a guardianship loophole, affluent parents are deceptively gaining financial aid for their children, depriving genuinely needy students of the assistance they need.
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Just months after the Varsity Blues college admissions cheating scandal was uncovered, a new scam has been revealed, this one involving parents gaming guardianship laws to gain need-based financial aid for their children.
In separate accounts by ProPublica Illinois and the Wall Street Journal, journalists have learned that dozens of parents in affluent suburban Chicago have given up legal guardianship of their children – usually in the children’s junior or senior year in high school – to friends or relatives. In their new status, the children then can declare themselves to be financially independent of their families, many of whom appear to have annual incomes in six figures and live in very expensive homes, and become eligible for need-based financial aid, including Pell grants, state aid for needy students and special institutional scholarships reserved for those with financial need.
Apparently this strategy was discovered when the University of Illinois was tipped off by a high school counselor about a student from a well-off family who’d been invited to an orientation program for low-income students. When the University looked into the matter further, it discovered that the student had recently completed a guardianship transfer. It soon discovered 14 more cases involving the same scheme.
Parents who have transferred guardianship for their college-bound children have told reporters that they were following a scheme proposed by Destination College, a college consulting firm that boasts of its “strategies to lower tuition expenses.” Most of the parents used two law firms to wiggle through the guardianship loophole that Destination College encouraged– the Rogers Law Group in Deerfield, Illinois and the Kabbe Law Group in Naperville, Illinois.
Andy Borst, director of admissions at the University of Illinois (Urbana-Champaign) called out the strategy for what it is: “It’s a scam. 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.”
According to ProPublica Illinois, the Department of Education is now investigating the matter, but already it has suggested that it might be necessary to add the following new language to federal financial aid regulations “If a student enters into a legal guardianship, but continues to receive medical and financial support from their parents, they do not meet the definition of a legal guardianship and are still considered a dependent student.”
Whether that clarification will fix the problem – particularly for all state and institutional aid packages – remains to be seen. What is clear however, is that neither the parents nor the impostor guardians with whom they conspired are burdened by too much of a guilty conscience about their joint scammer roles. Understandably, most of the parents, “guardians,” lawyers and college consultants involved are now not talking too much about their roles in this con game so it’s difficult to know how wide spread the guardianship dodge has become. It appears that the University of Missouri and the University of Wisconsin have uncovered cases involving applicants or current students.
The Varsity Blues admissions scandal had many culprits, including the institutions that were all too willing to see or hear no evil in their midst. The guardianship ploy is squarely the responsibility of affluent parents who, while they may have broken no laws, were willing to act unethically and gain an advantage to which they had to know they were not eligible. And in so doing, they also had to know they were pushing aside children whose needs were as real as the poverty they were trying to overcome. It’s also very difficult to envision the students involved in this scam not knowing what they were doing was a morally corrupt dodge, a falsehood to gain unwarranted benefits.
Universities now should take two actions. First, immediately investigate any recent need-based financial aid given or promised to students who have gone through a guardianship transfer in their adolescent years. And second, discontinue any need-based financial aid that’s discovered to be based on the bait-and-switch guardianship ploy. These students don’t deserve that aid, not for another minute.
