"Some Chicago-area parents have been gaming the financial aid system to get scholarships for their children that should go to needy students," World reports. 

"A recent investigation by ProPublica and The Wall Street Journal uncovered the technically legal but unethical practice of parents transferring custody of their college-bound children to friends and relatives who make less money. Coming on the heels of the college bribery admissions racket in which 19 wealthy parents face criminal charges, the Chicago scandal puts more pressure on the U.S. Department of Education to close financial aid and admissions loopholes.

One anonymous Chicago-area woman told the Journal she transferred custody of her 17-year-old daughter to a business partner, which only involved paperwork and a meeting with an attorney. The woman said her and her husband’s annual income of $250,000 was insufficient to cover their daughter’s tuition after they had already spent $600,000 paying for their other children to attend college. She also said they had no equity in their home, which was valued at $1.2 million.

... 

'They are gaming the system, whether it is legal or not doesn’t make it any less unsavory,' Justin Draeger, CEO and president of the National Association of Student Financial Aid Administrators, told the Journal.

The Education Department is considering updating the term “guardianship” to exclude students who continue to receive medical and financial support from their parents. While the scope of parents using this loophole is unknown, the Chicago case could trigger similar investigations across the country as other college officials begin looking for patterns."

NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Articles included under the notable headlines section are not written by NASFAA, but rather by external sources. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

Publication Date: 8/15/2019