Rich parents in Illinois have found a way to manipulate the college financial aid system.
They're using the tactic to get their children unqualified for financial aid into colleges for next to nothing and it is totally legal.
News of the suburban scam broke amid the nationwide college admissions investigations involving TV actresses Lori Loughlin and Felicity Huffman, who paid a college prep-expert to get their kids into prestigious colleges.
According to The Wall Street Journal, dozens of affluent parents have exploited scholarship programs and federal tuition aid intended for the underprivileged by giving up custody of their college-bound teens to friends or relatives.
In 2018, there were 38 cases in Lake County, Illinois, involving parents who transferred guardianship of their teens to increase their chances of qualifying for need-based financial aid.
Andrew Borst, director of undergraduate enrollment at the University of Illinois pointed out the legality of the sneaky ploy but questioned its ethics.
He told the WSJ:
"Our financial-aid resources are limited and the practice of wealthy parents transferring the guardianship of their children to qualify for need-based financial aid — or so-called opportunity hoarding — takes away resources from middle- and low-income students."
In one case, a 17-year-old student, whose parents earned around $250,000 annually and owned a $1.2 million-dollar home, transferred guardianship to a business partner.
The teen appeared to be a prime candidate when she claimed a $4,200 income from her summer job on her financial aid form.
Now, the student attends college on the West Coast where the annual tuition costs $65,000.
The wealthy parents told the paper under anonymity that they discovered a way around the system through a Lincolnshire-based consultant company called Destination College, which asks participants to sign confidentiality agreements.
According to ProPublica, the company is run by Lora Georgieva, who claims to apprise applicants with "strategies to lower tuition expenses."
Borst first became suspicious a year ago when a high school counselor from an affluent district inquired why a particular student was invited to an orientation program geared towards low-income students.
He then discovered that the student had obtained a legal guardian and was independently qualified for financial aid.
The University of Illinois then identified 14 other applicants who used the same tactic – three of whom had just finished their freshman year and 11 others planning to enroll in the fall.
Borst called it "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."
The underhanded stratagem is infuriating those on social media.
Justin Draeger, CEO and president of the National Association of Student Financial Aid Administrators, identified what parents with deep-pockets are really doing.
"They are gaming the system, whether it is legal or not doesn't make it any less unsavory."
ProPublica asked if anyone knew of someone gaming the system to share their stories and observations.
The WSJ reported that the The Department of Education is looking into the cases.
To get financial aid help the ethical way, the book The Ultimate Scholarship Book 2020: Billions of Dollars in Scholarships, Grants and Prizes is available here.