Rich People Now Just Signing Over Custody of Their Kids to Score Financial Aid, Apparently

As if one major college-related scandal weren’t enough in a year, there comes this news: wealthy parents in Illinois are reportedly scamming financial aid for their college-bound children by transferring guardianship to someone else, freeing up said children to claim financial independence. Is this pretty unethical? Absolutely. Is it illegal? Apparently not!

The story was reported on Monday by both the Wall Street Journal and ProPublica Illinois, who found the tactic employed by a number of parents in wealthy Illinois suburbs. The scam works as such: parents will transfer guardianship of their 16 or 17-year-old child to a friend, neighbor, or family member, citing some kind of disturbance at home that precludes them for caring for their offspring. Then, that child is able to cite only their own income—from a summer job, for instance—on financial aid forms, making scholarships and other aid for low-income students available to them even if their parents are high earners.

One Chicago-area woman with a household income of over $250,000 told the Wall Street Journal she transferred guardianship of her teenage daughter to her business partner shortly before she applied to college. Per the WSJ:

Transferring her daughter’s guardianship was largely a matter of paperwork, the mother said. Her business partner attended a court hearing with an attorney. She, her husband and her daughter didn’t even need to show up, she said. Once the guardianship was transferred, the teen only had to claim the $4,200 in income she earned through her summer job, the mother said.

Today, her daughter attends a private college on the West Coast which costs $65,000 in annual tuition, she said. The daughter received a $27,000 merit scholarship and an additional $20,000 in need-based aid, including a federal Pell grant, which she won’t have to pay back. The daughter is responsible for $18,000 a year, which her grandparents pay, the woman said.

ProPublica Illinois found at least 40 guardianship cases like this one filed over the last year, and the University of Illinois said they’d flagged over a dozen freshmen and incoming freshmen from wealthy areas whose parents appeared to employ the same tactic (they were apparently tipped off by a high school kid who told her guidance counselor about it).

Andy Borst, director of undergraduate admissions for the University of Illinois Urbana-Champaign, told ProPublica that the university informed the flagged students they’d be reducing their aid for the coming year. No students complained, which, as Borst pointed out, suggested none of them were particularly needy.

Both ProPublica and the WSJ traced the tactic back to Destination College, an Illinois-based college consultant company that offers “strategies to lower tuition expense”; a number of parents they spoke to said the company suggested the guardianship move to save money.

The practice is legal, and some of the parents interviewed said that without it, they’d be unable to shoulder the high cost of tuition even with their significant income. There is no question that university tuition in this country is too high, even for upper middle class families who otherwise live comfortably. That is an issue, but in this case, so is grift.