Two reports shine a light on the ethically questionable practices some families have resorted to in order to get their children financial aid

By Jason Duaine Hahn
July 30, 2019 05:08 PM

Reports from ProPublica and the Wall Street Journal published this week reveal that some wealthy parents have gone as far as transferring guardianship of their teenage children to help them get government-issued financial aid meant for students in need.

The investigations found that dozens of affluent parents in Chicago exploited a loophole in the law that allowed them to transfer legal custody of their teenage children to friends, relatives, or someone else, to severe their children’s ties to their finances and thus make them more eligible to get federal state and university financial aid.

ProPublica reported finding at least 40 instances where wealthy parents (which included lawyers, a doctor, real estate and insurance agents and an assistant school superintendent) from the Chicago suburbs found a legal guardian for their high-school age child between January 2018 and January 2019.

If the strategy worked, the children would then apply for federal student aid — without having to disclose their parent’s wealth — and potentially receive money that was set aside for middle- and low-income students. The practice, known as “opportunity hoarding,” allows children to receive government money when they otherwise wouldn’t have received it.

“It’s a scam,” Andy Borst, director of undergraduate admissions at the University of Illinois at Urbana-Champaign, told ProPublica. “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.”

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Borst told the outlet that he was tipped off to the practice when a high school counselor called him to ask why a particular student had been invited to an orientation for low-income students despite being from an affluent community. After reviewing the application, Borst said he found she had obtained a legal guardian.

The University of Illinois has since traced 14 applicants who also found legal guardianship, according to ProPublica. Three recently completed their first year at the school and the other 11 are set to start later this year, the outlet reported.

Borst told ProPublica that when the university told the three students that their financial aid would be reduced, none of them fought the decision.

“We didn’t hear any complaint, and that is also a big red flag,” Borst said. “If they were needy, they would have come in to talk with us.”

The University of Illinois did not immediately return PEOPLE’s request for comment.

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According to the Journal, the Department of Education is now investigating the method.

“The laws and regulations governing dependency status were created to help students who legitimately need assistance to attend college,” Department of Education Press Secretary Liz Hill tells PEOPLE in a statement. “Those who break the rules should be held accountable, and the Department is committed to assessing what changes can be made — either independently or in concert with Congress — to protect taxpayers from those who seek to game the system for their own financial gain.”

“[The families] are gaming the system,” Justin Draeger, CEO of the National Association of Student Financial Aid Administrators, told the Journal. “Whether it is legal or not doesn’t make it any less unsavory.”

The reports come on the heels of the college admissions cheating scandal.