"The U.S. Education Department is being urged to close a loophole that has allowed some wealthy families to get federal, state and university funding that's meant to help needy students. Federal authorities were notified last year that some parents in Illinois had transferred custody of their children to friends or relatives to make it appear they came from poorer backgrounds. In doing so, they became eligible for scholarships and federal grants that are typically reserved for low-income students," The Associated Press reports.

"... Andy Borst, director of undergraduate admissions, said that while the strategy appears to be legal, it's ethically questionable. By tapping into funding for needy students, he said, wealthy families deprive students who legitimately need help. Some of the families were able to obtain state grants that are first-come, first-served, while thousands of other students were turned away.

'Financial aid is not infinite,' he said. 'There are students who are eligible for need-based aid who are not receiving their awards because the state runs out.'

...

The scheme, which was first reported Monday by Pro Publica and The Wall Street Journal, has been traced to clusters of parents in Chicago suburbs. It's unclear how widespread the scheme reaches, but admissions and financial aid groups said they hadn't heard of reports outside Illinois. Still, it's likely to spur internal reviews at other universities across the nation.

'I can guarantee that they are going to start doing some digging on their own campuses to see if they see any patterns,' said Jill Desjean, a policy analyst at the National Association of Student Financial Aid Administrators.

Some parents told Pro Public and The Journal that they transferred custody of their children on the advice of a college consulting firm called Destination College, based in Lincolnshire, Illinois. The company's website promises to help parents pay for college 'in the most efficient and inexpensive way.' The firm did not respond to a request seeking comment."

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: 7/30/2019