Wealthy parents around the country are voluntarily giving up custody of their children so that they can qualify for low-income tuition aid. One administrator called the move a “scam” that “takes away opportunities from families that really need it.”
According to a report by ProPublica, wealthy American parents are exploiting a legal loophole that allows their children to apply to public universities as low-income independent adults. Instead of declaring their parent’s high incomes on financial aid forms, these students are reporting the little money they have earned at part-time jobs. This loophole qualifies students for low-income financial aid.
So how exactly does this loophole work? Parents relinquish guardianship of their high-school-aged children during their junior or senior year. At that point, guardianship is transferred to an aunt, grandparent, or close friend. Once the guardianship has been transferred, the students are free to apply for financial aid, reporting only their own income.
Andy Borst, director of undergraduate admissions at the University of Illinois at Urbana-Champaign, blasted the families that are exploiting the system.
“It’s a scam,” Borst said. “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.”
“It’s not like these families are close or on the tipping point” of being eligible for the aid, Borst added. “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?”
Universities and colleges around the country are catching onto this tactic. Many financial aid offices have deployed policies to combat abuse. The University of Wisconsin, Madison, for example, has announced that they reserve the right to adjust a financial aid award at any time if they learn that parents are providing financial support to their “independent” children.
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