Earlier this year, a federal investigation resulted in the indictments of 40 people, mostly wealthy parents, for bribery and forgery to get their kids into elite universities. Now, the Department of Education is looking into another potential scam, but this time it's a completely legal one.
According to a new story from The Wall Street Journal, some Chicago-area parents have been legally transferring guardianship of their children to other people so that colleges don't consider the family's net worth when making financial aid decisions. The Journal spoke to one anonymous mother with a household income of more than $250,000 per year and a $1.2 million house. She said she's already spent $600,000 putting other kids through school, so before her youngest daughter applied to colleges, she made her business partner the girl's legal guardian, a process that causes colleges and universities to consider only an applicant's income, not their family's. Per the Journal:
Transferring her daughter’s guardianship was largely a matter of paperwork, the mother said. Her business partner attended a court hearing with an attorney. She, her husband and her daughter didn’t even need to show up, she said. Once the guardianship was transferred, the teen only had to claim the $4,200 in income she earned through her summer job, the mother said.
The daughter now attends a private $65,000-a-year West Coast college, where she received "a $27,000 merit scholarship and an additional $20,000 in need-based aid, including a federal Pell grant, which she won’t have to pay back."
The anonymous mother who spoke to the Journal reportedly used Destination College, an Illinois-based company that claims on its website to save families as much as $40,000 a year on tuition, to help set up the transfer. The Journal found court documents for 38 cases where a judge granted a change of guardianship in a teen's last two years of high school, with nearly all containing some version of the language, "The guardian can provide educational and financial support and opportunities to the minor that her parents could not otherwise provide." In most of these cases, the Journal found, the families had homes valued between $500,000 and $1 million.
After receiving a tip from a high school counselor whose student had bragged about the strategy, admissions officers at the University of Illinois discovered they had admitted 15 students who had recently transferred guardianship, and announced they would conduct a more thorough review before awarding them funds. The investigative branch of the Department of Education, the Office of Inspector General, is now looking into the loophole.
This latest scam highlights just how lopsided educational opportunity is in the U.S., with wealthy people having legal avenues not only to get their kids into better schools, but to save them money in the process. By comparison, in 2011, an Ohio mother was charged for falsifying her address to send her daughters to the public school in a neighboring district. The district demanded she pay $30,000 to recoup the cost to taxpayers, and when she couldn't pay, she was sentenced to 10 days in county jail and three years' probation.
Originally Appeared on GQ