Posted on 07/31/2019 10:35:50 AM PDT by Red Badger
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U.S. Department of Education Wants to Stop “Student Aid Fraud Scheme” Where Parents Give Up Custody Through Dubious Guardianships
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One day after our reporting, the department’s inspector general said it wants to close financial aid loopholes.
Federal and state officials said Tuesday they want to close loopholes that allow families to get need-based financial aid they would not otherwise receive by giving up guardianship of their college-bound children.
The move, they said, could end “potential student aid fraud” when parents turn over guardianship of their children in hopes of obtaining a tuition break.
A spokeswoman for the U.S. Department of Education’s Office of Inspector General said the office has recommended modifying the language on federal financial aid forms following disclosure of the tactic, first reported by ProPublica Illinois on Monday. The Wall Street Journal also published a story late Monday about the issue.
“What we can tell you is that we are aware of this issue and suggested to the Federal Student Aid office (FSA) that it add clarifying language to the FSA Handbook that would help close possible avenues for this type of potential student aid fraud,” the inspector general’s spokeswoman said in a statement.
The new language would aim to ensure students involved in this kind of guardianship no longer qualify for aid if they continue to receive medical and financial support from their parents.
The Inspector General’s Office was not aware of any prosecutions to date involving “this specific type of student aid fraud scheme,” the spokeswoman added.
Officials with the Illinois attorney general’s office said Tuesday they also “have concerns” about the practice and will contact the state agency that administers a need-based grant “as we look into the matter further.”
State lawmakers also called for reforms.
ProPublica Illinois reported this week that dozens of suburban Chicago families, and perhaps many more, have given up legal guardianship of their teenage children to qualify for federal, state and university aid.
The parents — including lawyers, educators and a doctor — turn guardianship of their children over to relatives or friends sometimes months before they turn 18. By doing so, the children can then declare themselves financially independent and qualify for aid they would not otherwise receive.
Andy Borst, director of undergraduate admissions at the University of Illinois at Urbana-Champaign, said he is glad the practice has been exposed. The university first alerted the Department of Education to these cases in July 2018.
“I’m pleased that this issue has been brought to light and is being discussed widely,” Borst said. “I am hopeful that additional action can be taken to close this loophole.”
While ProPublica Illinois identified close to four dozen families in the northern suburbs of Lake County alone that filed similar petitions for guardianship, the practice appears to be more widespread. An attorney who has filed petitions in Lake County said she has also filed similar cases in Cook, DuPage, Kane, Will and McHenry counties.
ProPublica Illinois is continuing to investigate.
Illinois lawmakers on Tuesday also called for an examination of any state laws or rules that allow wealthy families to take advantage of the Illinois Monetary Award Program, or MAP, grant. Some 82,000 students were eligible for the grant last year but did not receive it because there wasn’t enough money. The grant, up to about $5,000, is awarded on a first-come, first-served basis.
“It looks like theft from taxpayers and theft from students and families who legitimately deserve need-based financial aid,” said state Sen. Pat McGuire, a Will County Democrat who chairs the Senate higher education committee.
McGuire said he plans to contact Gov. J.B. Pritzker’s office, the Illinois attorney general’s office and the Illinois Student Assistance Commission, which administers the MAP grant, to look for ways to close any loopholes.
If that doesn’t work, he said, he will consider filing new legislation.
“It’s especially galling because the legitimate need for MAP is proven by the fact that not everyone who applies for it gets it,” McGuire said. “And even those who get it, in many cases, still are required to take out loans and work more hours per week than is advised to afford college.”
State Sen. Cristina Castro, a Democrat from Elgin, said she shared McGuire’s concerns.
“It is particularly troubling,” she said. “You think of how we’ve increased MAP funds, but we always run out.”
Castro said she was disappointed to read that one of the parents identified by ProPublica Illinois who had given up guardianship of her teenager was an assistant schools superintendent.
“That was mind-boggling,” she said. “Those are people who should and are able most of the time to pay for that education. And that’s troubling that they would go to great lengths not to.”
The students involved in these cases have gone on to be accepted at public universities and private colleges across the Midwest and as far away as California, according to their social media accounts and student newspapers.
A spokesman for the University of Missouri on Tuesday said officials have decided to pull university-based financial aid if they are able to confirm the student “misrepresented their financial situation for the sole reason to get need-based aid when they otherwise would not be eligible.”
The university’s financial aid office continues to investigate. So far, the spokesman said, it has found “an extremely small number” of cases.
Eliminate the department of education and get the federal government out of the student loan business. Problem will self-correct in one year.
Lefties never understand that the ability of humans to game whatever system they can imagine vastly outclasses their ability to prevent it.
That is, when they haven’t built their own game into the system for the specific purpose of screwing everyone else...
If these parents had just made their offspring work harder and study more than playing soccer, football, or whatever , they would have gotten in a college or university on a scholarship...................
I think this little loophole was just a ‘law of unintended consequences ‘ thingy............
They are 18 years old and Adults, the very idea that the gubmint relies on their Parents Income is ludicrous.
There is another side to that coin that goes along with it. I knew a girl who had wealthy parents, she got pregnant in high school and they disowned her. She was living on her own, working, supporting her and her daughter. Decided to go to college and could not get financial aid at all because she didn’t know how to work the system. She did manage to put herself through college but in my opinion that money should be there for people like her, but it wasn’t.
I don’t know how all of this needs to be done, but at some point it needs to be decided on case by case when there are unusual circumstances. That is the kind of thing the government is not good at though.
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She did manage to put herself through college but in my opinion that money should be there for people like her, but it wasn’t.
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WHO’S $$ & by what authority? Got a 5th & 13th says the debate is moot; were we still a Constitutional Republic
Loopholes like that are often designed and put in place on purpose so those in the know will be able to take advantage.
How did the people who have been caught doing this find out that it worked? Did they all come to the same conclusion on their own (IMO unlikely), or was there a network of insiders spreading the word?
Amen. Right now the DoE is the chain-gang master responsible for the enslavement of millions of young Americans with $1.6 Trillion in student loan debt. They loaned or guaranteed most of it, and all it did was feed a massive bubble in tuition and leftist staff at most universities. its the housing bubble redux - and wait to see the fraud that is revealed when this bubble pops.
Hmmmm...wouldn’t this also prohibit the parents to claim their disowned children as dependants on their tax returns?
Too bad these kids are illegals so they can free tuition.
A child is also emancipated by marriage or enlistment in the military.
I foresee many a temporary marriage in the future.
And, candidly, I don’t really care. Yes, it’s fraud, but so is basically every other government give-a-way. Some of that money might as well go to the people who paid the taxes.
Yes, it would.
But so what. The “wealth of parents” deal extends until age 24, long after they cease to be dependents.
Having been through the FAFSA gambit many years ago I recognize what is going on in a larger picture. When your child decides to go to College/University they look at you in a “guarantor” mode on the FAfSA application as typically they are 18 or older and you have been providing for them till that time.
Going forward using your financial information it is used in the calculation of how much additional they may qualify for such as Pell grants and other programs that can offset the overall Tuition per year. In it’s own way it favors those of lesser means as providing access to these programs in favor over parents to who the expectation is YOU are going to pay for it because you are successful and they don’t need no stinkin grants or help. If you make too much then the burden of paying for it is pointed at you and your child may lose out as a result if your intent was for them to do so.
If at 16 you declare your child as an emancipated minor they stand alone as far as programs and the various forms of Financial aid that will be made available to them. If they go for a Student Loan otherwise they may require a Co-signer which means if they don’t pay YOU do. There are multiple grants and other vehicles that they may qualify for based upon the course of study and other factors, it is a very arduous task and there are companies that will help you in the process of getting this done.
So I do understand taking this road in principle, it lays the burden of getting it done more on them and taking care of themselves and their lives as they go forward. I have been out of the “game” for some time meaning the Student Loan program may allow for students to get loans on their own without a cosigner
All government $$$ for college should be eliminated.
Scholarships are a very misunderstood program but as you posit if they work harder in school and get better grades or are a star football player they have a leg up on others and may qualify for a no need to pay back grant or scholarship.
I remember going to a college night event with my Niece who was living with us and a Mom and her son who was not more than 5 feet tall asked at the next table about Football Scholarships. Not to be condescending but unless he was Emmit Smith or a superstar there was little if any chance of that happening
So in closing Yes, kick butt and take names in HS and hit the books not the Babes and it will take you far. Allow your child to just have a “good time” experience and you will pay for it in the end, literally
Think living in your basement till they finally get it or worse
Just emancipate the kids at 18.
Sure it’s fraud.
But look at what’s happening over the past 30 or 40 years. The government has promoted college, promoted loans, promoted tuition breaks for everyone who is either non-white or below middle-class. Of course it costs more, because the traffic has borne it.
But, most parents who are on the pay side can no longer bear the cost without nearly bankrupting themselves. The new reality is that instead of “one major illness away from insolvency” you’ve got “one more child’s tuition away from no savings.”
I'll try to keep this short, but it gets kinda complicated. A few years ago, Harvard did a study called "The Harvard Hunger Study." Looks like it's been mostly erased from the web, but it listed College Station, Texas as being a "hungry area." Turns out what they did was go through census data and determine anyone below the poverty line was hungry. College Station didn't fit this profile, BUT Texas A&M is there, with an enrollment of 60,000 students in a city of 120,000. Turned out a lot of students from wealthy or well off families were getting need based financial aid "working full time," so the family income wouldn't count. In one case, IIRC, the parents bought a duplex, and paid their kid a salary to manage the other side. It was all legal. The parents got a tax break by buying an investment property, got another tax break because the money they sent their kid wasn't an allowance, but a salary (expense) and the kid didn't make enough to pay taxes on the income but DID fall within the parameters to get needs based financial aid. The financial aid folks changed the rule, and parental income HAD to be counted, whether they were helping the kid in college or not, until age 24.
In this new thing, by "giving their kid up," they've found a way around this requirement, as emancipated youth do not have to count on parental income, but they have to be emancipated, I think, before age 18.
Government (taxpayer) funded financial aid is "need based," as opposed to "merit based." FWIW, I'd rather see all financial aid be merit based.
The book, The Bell Curve, has a great explanation of why need based financial aid exists, but this post is already too long for most people to read.
Dear College Financial Aid Officer:
Our dear daughter Debbie would love to spend four years at your establishment.
Your proposed tuition tab of $200,000 is not a logical number.
We can buy Debbie a small apartment house in Collegetown using that $200,000 as a down payment.
Debbie can collect rents for the rest of her life, party and each September buy college course books at your bookstore, or off Amazon.
Please provide us with a reasonable guaranteed four-year discounted tuition price such as $20,000 as you are currently refusing to extend Debbie financial aid.
Yours Truly,
Debbie’s Devoted Parents
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