Parents giving up guardianship to maximize their children’s need-based college financial aid

A recent investigation found that dozens of families from wealthy Illinois suburbs had turned over guardianship of their college-bound children to a family friend or relative, enabling those children to declare financial independence and qualify for need-based financial aid that they would not normally receive. ProPublica Illinois and The Wall Street Journal revealed the practice; the former discovered more than 40 such guardianship cases between January 2018 and June 2019 in Lake County, north of Chicago.

Five other Illinois counties have seen similar guardianship petitions, and ProPublica is still exploring whether this is happening elsewhere. The Department of Education, meanwhile, is investigating such transfers via its Inspector General Office.

Diverting resources intended for low- and middle-income students

Andrew Borst, director of undergraduate enrollment at the University of Illinois, told ProPublica that the school found 14 applicants who used this tactic. “Our financial-aid resources are limited, and the practice of wealthy parents transferring the guardianship of their children to qualify for need-based financial aid—or so-called opportunity hoarding—takes away resources from middle- and low-income students,” Borst told The Wall Street Journal. “This is legal, but we question the ethics.”

Illinois awards its state Monetary Award Program (MAP) grants on a first-come, first-served basis, and 82,000 MAP-eligible students were left without grants last year after money ran out.

Consultant says clients are too wealthy for aid, but unable to cover college costs

The Journal traced the Illinois guardianship transfers’ origin to Destination College, a consulting firm that claims to have “strategies to lower tuition expenses.” Lora Georgieva, the owner of the company, confirmed that she has helped families with guardianship cases, saying that she launched the service after watching parents drain their savings and go into debt trying to send their children to college.

“If they don’t have other options, I share with them the rules for independent status for FAFSA,” Georgieva told The Chicago Tribune. “I just thought this might be a way—not to fully fund college, not to make the rich people richer—but to help primarily the middle class who are working so hard and cannot send their kids to college.”

Financial aid expert Mark Kantrowitz, meanwhile, told ProPublica that the guardianship transfers are unusually “brazen.” “It’s completely unethical,” he said.

Another symptom of a systemic problem

While agreeing that the guardianship scheme is unsettling and unethical, Inside Higher Ed columnist John Warner says that it is actually “logical, inevitable, [and] therefore not shocking.” It is, he writes, “the inevitable consequence of rising college costs and a cobbled together financial aid system that simply makes no sense.”

Combined, those forces have left even relatively high-income families resource-constrained and unable to send their children to college loan-free. More importantly, he says, we must “recognize that if these rich people are having trouble, many more not rich people are not only having trouble, they are shut out entirely.”

The answer, he asserts, is not to tack more guardrails onto the existing system, as families with significant resources and savvy “will figure out how to get their kids’ college paid for.” Rather, this latest scheme suggests that “we’re at an inflection point,” where the nation must decide whether public higher education is “a public good that’s accessible to all who deserve it regardless of income, or private good reserved for the wealthiest and those most able to game the system.”

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