Summer is beginning to come to a close for many young adults as they prepare to head off to college, meaning that parents are also preparing to shell out thousands of dollars for their child’s education as bills for tuition, room and board, and meal plans have started rolling out.
While deadlines for filing the Free Application for Federal Student Aid and other scholarships have already passed, some parents and students might already be looking to the future, wondering how they will pay for the years to come.
Some families in Chicago already have that figured out.
On Monday, ProPublica Illinois and the Wall Street Journal both reported that wealthy families in the Chicago area have been using a loophole in the financial aid system in order to obtain funds, that they would normally not qualify for, by transferring legal guardianship of their children to relatives or friends, meaning that only the child’s earnings would be considered in their applications for financial aid.
According to both sources, the United States Department of Education is investigating the tactic after it came into the spotlight through an increase in guardianship transfers in the area.
Though the practice is legal, education officials are questioning the ethics behind the so-called “opportunity hoarding,” as it takes away monetary resources from low- and middle-income students.
While the practice has been used to get children from Illinois into schools as far away as the West Coast, officials with West Virginia University and Marshall University, two of the biggest public colleges in the state, are not concerned about the tactic affecting them.
“This is not currently a concern at WVU,” said Sandra Bennett, assistant vice president of WVU Student Financial Aid Support and Services. “We have very few students who are independent on the basis of legal guardianship.”
Bennett said from her perspective she was unaware of any abuse of the guardianship process in West Virginia.
Per the West Virginia Judiciary, 17 rules must be followed in minor guardianship proceedings for a child to receive a different guardian than their parent, not counting the various other information that must be provided during the process.
Specifically, there are 13 items that must be included in the petition alone for a judge to grant a change in guardianship such as a statement describing the reason or reasons why the guardianship appointment is sought; a statement affirming the competency and fitness of each proposed guardian, further attesting that the welfare and best interest of the minor will be properly protected by the appointment; and many other things.
According to an attorney contacted by ProPublica Illinois and the Wall Street Journal, the Illinois guardianship law gives judges a great deal of discretion when dealing with these cases because of how broadly it’s written.
“The standard is, best interest of the child, and I think it’s hard to argue that this is not the student’s best interest,” she told them.
Leah Payne, director of communications at Marshall University, said according to those in the Office of Student Financial Assistance, this loophole is not a huge issue for the university because they don’t have any reason to question students’ legal guardianship.
“If the student provides us with legal documentation of their legal guardianship, we don’t have any reason to question that, so I guess that it would be hard to know,” she said. “It’s going to be difficult to determine why legal guardianship may have changed, but we’d have no reason to question that.”
ProPublica Illinois and the Wall Street Journal also reported that a college consultant company local to the Chicago area was advising some parents to use this strategy to save families money.
Jamie Dickenson, educational counselor and owner of Jamie Dickenson, LLC. in Charleston, said this practice “goes against everything” she believes in but that she doesn’t think this will be a rampant problem in West Virginia.
Dickenson’s business offers services such as college planning, tutoring, test preparation and financial aid planning.
“Financial aid is made for people in need, and I think the reason it’s not a big deal in West Virginia is because most families have need,” she said. “I think people waste a lot of time, effort and energy trying to jockey around to squeeze out the best thing, but if you can do it legally and ethically, which is what I do, then I don’t think there’s anything wrong it.”
Legal and ethical ways of obtaining financial aid include applying for need-based scholarships if a family makes less than $50,000 a year, in some cases with Ivy League schools $250,000, or merit-based scholarships through grades and standardized test scores.
“Really, really poor people, low-income people will get funded to go to university,” Dickenson said. “Really, really rich people don’t care, but those are the ones that are scamming to get in, and then it’s just the middle-of-the-road, double-income parents who do the right thing, who work hard and just make too much money to qualify for need-based aid yet don’t make enough money to pay for college that it’s freaking them out.”
Dickenson gave examples of students that have gotten scholarships in ways that didn’t include using a loophole in the system, such as a student from Boone County who got into Yale University and ended up only paying $3,000 a year, due to actual need-based and merit-based scholarships, to go to a school that typically costs $75,000.
“That’s what financial aid is for. It’s for people from Boone County who can hardly pay for anything but can get an Ivy League education for no amount of money,” she said.
Dickenson said wealthy families using this loophole comes down to nothing but greed.
“The scamming of financial aid, that’s just nothing but downright robbery; that’s just greed,” she said. “If you’ve got enough money that you can hire an attorney, do a guardianship [transfer], move that student out and do that, then shame the hell on you.”
“That’s just highway robbery, and financial aid is truly for [people] like the citizens of West Virginia because they’re the ones who need it,” she said.