TODAY aired a segment (7/31/2019) on the growing number of parents giving up parental rights so their kids can go to college for a lot less money. The financial problems of many parents being able to send their children to college is impossible. It seems every year colleges go up on the tuition and so does the cost of living. The pay raises just can’t keep up which is leading many parents to give up custody of their children so they can meet the requirements scaled by student loans and scholarships. If students can claim a lower income than what their parents make each year then they stand a better chance at earning financial aid for school. But, is this drastic measure a legitimate need or just another scam like we have seen recently in the news?
Two publications are reporting that this is exactly what is happening. ProPublica and The Wall Street Journal said in their reports that dozens of parents have attempted this method.
Wealthy parents transfer their legal custody to someone, often it’s another relative or a friend, and when it’s complete, the student applies for financial aid.
Thanks to the transfer, these juniors and seniors in high school can claim they are financially independent and therefore more apt to obtain scholarship money.
“It’s a scam,” Andy Borst, the 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.”
“The tactic is legal but ethically questionable,” said Borst. Chief among his concerns: Financial aid money is limited.
The scheme bears similarity to tactics adopted by Rick Singer, the mastermind behind the nation’s largest college admissions scandal. In Singer’s scheme, rich families also used their resources to secure advantages normally dedicated to those in need.
For instance, Singer would instruct wealthy families to have their children diagnosed with disabilities. As a result, they got more time to take the ACT and SAT, college admissions tests, which could translate to higher scores.
ProPublica identified more than 40 cases of parents giving up guardianship to get aid in the suburbs of Chicago, but suspect the practice may be happening across the country. Their investigation is ongoing.
“This is the first time I have heard of something so brazen,” Mark Kantrowitz, a leading financial-aid expert, told ProPublica. “It’s completely unethical.”
According to Department of Education data from 2016-17, 80% of federal Pell Grant student aid went to families earning $40,000 a year or less. With the cost of college and levels of student debt already reaching record highs, poorer students attend college at much lower rates. Just 32% of students from the bottom fifth percentile of earners go to college, compared to 78% of students coming from the top fifth income distribution.
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