Aunt Becky’s legal woes arose from her efforts to get her children into the University of Southern California. However, for many families, the problem isn’t getting their kids into a college of their choice, the problem is paying for it.
Some enterprising parents in Illinois reportedly have given up custody of their children to help them get college scholarships. According to a news story at Probublica online, dozens of wealthy families in Illinois have given up legal guardianship of their children so the teenagers can claim dramatically lower incomes and earn need-based financial aid.
When the guardianship proceeding is completed — usually during junior or senior years of high school — students are able to declare themselves financially independent on college applications. In one instance detailed by the Wall Street Journal, a student whose parents owned a $1.2 million home only had to declare $4,200 in income from a summer job. That student was able to obtain about $47,000 in scholarships and federal Pell grants to attend a private university that costs $65,000 per year.
The practice is legal, but the United States Department of Education is looking into the matter. And some universities are pushing back against the practice, reducing university-based financial aid awards to some students.
The article notes that laws in Illinois governing the transfer of legal guardianship are broadly written and that as long as the parents, children and the court agree, a judge can approve the transfer even if parents are able to financially support their kids. It’s not clear if the tactic has been tried in other states.
You can read the entire Propublica article here.