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Wealthy Parents are Transferring Guardianship of Kids to Get Financial Aid

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It’s no secret college is extremely expensive with many recent graduates putting off getting married or moving out of their parents’ homes due to the exorbiant student loans they took out to pay for their degree. But wealthy parents, who can actually pay for college, are using a loophole to allow their children to get cheaper schooling by transferring guardianship.

The Wall Street Journal published an investigative piece that showed wealthy families in Chicago, Illinois, are transferring their children’s guardianship to friends and families who are poorer so they can receive financial aid and scholarships they normally would not be privy to.

“It’s a scam,” said Andy Borst, director of undergraduate admissions at the University of Illinois 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.”

Wealthy parents have found a loophole. By giving up legal guardianship of their child during their junior or senior year of high school, the child can then, in turn, qualify for state and university financial aid.

Currently, this investigation has only been conducted in Illinois, but it isn’t too hard to believe that this is happening across the United States, especially with the recent college admission scandal earlier this year.

From January 2018 to January 2019, ProPublica found more than 40 guardianship cases were used to cheat the system, with many parents holding prestigious positions in society such as a doctor or lawyer, both of which make more than enough to send their child to any university.

Borst said the University of Illinois found 14 applicants who used this tactic. Three of those students were informed that they would have their financial aid reduced, which didn’t seem to bother them. “We didn’t hear any complaint, and that is also a big red flag,” Borst explained. “If they were needy, they would have come in to talk with us.”

The Illinois Probate Act does not dictate the circumstances in which guardianship can be denied, so legally speaking, there isn’t much these parents can be charged with.