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Tuesday, December 5, 2006

Columbia Grad Student Marries Friend to Get Bigger Financial Aid Package

We tax types talk and write quite a bit about the marriage penalty, under which a couple that marries often pays a greater total federal tax liability then they would have paid had they remained single.  Today's Chronicle of Higher Education reports that there is a marriage bonus under the federal college financial aid rules:

[A Columbia graduate student] married a friend solely to take advantage of a federal policy that provides more-generous aid to students who are either married or in the military.... Their relationship is platonic, and in fact his wife is romantically involved with another man. It sure sounds awkward, particularly if the Internal Revenue Service or the Education Department gets wind of his scheme and his identity. But right now, he said, it’s saving him $11,000 in student loans.

For more details, see the Columbia Spectator:  Feigned Marriage Helps to Prove Financial Independence, by Varun Gulati

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