Wall Street Journal, College Financial-Aid Loophole: Wealthy Parents Transfer Guardianship of Their Teens to Get Aid:
Amid an intense national furor over the fairness of college admissions, the Education Department is looking into a tactic that has been used in some suburbs here, in which wealthy parents transfer legal guardianship of their college-bound children to relatives or friends so the teens can claim financial aid, say people familiar with the matter.
The strategy caught the department’s attention amid a spate of guardianship transfers here. It means that only the children’s earnings were considered in their financial-aid applications, not the family income or savings. That has led to awards of scholarships and access to federal financial aid designed for the poor, these people said.
Several universities in Illinois say they are looking into the practice, which is legal. ...
The Journal’s review of more than 1,000 probate court cases filed in 2018 in Lake County, Ill., turned up 38 cases in which a judge granted the transfer of guardianship to a teenager in his or her junior or senior year of high school. Most of the families live in homes valued around $500,000. Several of those homes were valued at more than $1 million, according to property sites including Zillow.
In court documents, a petitioner is asked why he or she should become a guardian. Nearly all of the 38 cases use some version of this language: “The guardian can provide educational and financial support and opportunities to the minor that her parents could not otherwise provide.”
ProPublica, Parents Are Giving Up Custody of Their Kids to Get Need-Based College Financial Aid:
First, parents turn over guardianship of their teenagers to a friend or relative. Then the student declares financial independence to qualify for tuition aid and scholarships.