~snipped~
I thought that to be independent for FASFA, the guardianship had to be court-ordered (like for abuse).
I just read this article. Seems like this loop hole is going to be closed quickly.
The guardianship needs to be a legal guardianship…not just some informal arrangement.
The regulations are such that this should not be an issue. Schools need to verify all claims of guardianship to prevent guardianship claims that don’t meet the criteria.
Just giving guardianship to a relative does not meet the definition for the student to be independent. I worked at a very large public university. We had an aid officer who was in charge of vetting all claims of guardianship. She was well trained, and she collected documentation. This stuff would not have slipped through.
The snippets I see in the article are “best interest” … custody. Custody doesn’t qualify for independent status. That is why all Guardianship claims must be vetted.
FAFSA requires the student to have been in a court ordered (not just court approved) guardianship or a ward of the state to qualify as an independent student on FAFSA. I don’t think ANY of these student will qualify.
U of I can’t stop them from applying for FAFSA claiming an independent status, but it can require verification.
this is not just a FAFSA issue, but another devious, yet somehow legal tactic that applies to Illinois students , which was used by a college counseling service based in Illinois , to allow rich Ill. parents to game the FA system by transferring guardianship of their children to others.
Obviously it needs to change. And will soon, now that it has the attention of the Dept of Education.
Stay tuned .
"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.
Today, her daughter attends a private college on the West Coast which costs $65,000 in annual tuition, she said. The daughter 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 daughter is responsible for $18,000 a year, which her grandparents pay, the woman said.
The woman and another Chicago-area parent who spoke to the Journal said they followed the strategy laid out by a college consultant company called Destination College, based in Lincolnshire, Ill. The company says on its website it has saved families as much $40,000 a year per student. The website doesn’t specify how.
The owner of the company, Lora Georgieva, didn’t respond to requests for comment. Other people who said they are clients of the firm and spoke to the Journal said they were asked to sign a confidentiality agreement to not disclose her strategy of transferring guardianship. "
But the mother is wrong. It IS a FAFSA issue to get a Pell grant. The standard for being independent on FAFSA is to have been in state custody at any time after age 13 or to be in a court APPOINTED guardianship. Not a court approved guardianship but an appointed one.
Of course the student can check the box that she is an independent student since she’s in a guardianship, but that shouldn’t meet the verification test. How many students have been on here from foreign countries and not been allowed to exclude the parent’s income back in the home country because they are living here with Uncle Joe?
Beyond whether or not it meets the qualification test, I cannot help wondering about the psyche of the parents/children and their relationships that they would actually be OK with relinquishing custody of their child over $$ and an expensive college education. The quote says it was just paperwork. No, it isn’t in the eyes of the law. No way I would ever forsake my parental bond with my child over $$. Wowsers. There are some messed up people out there with very strange values.
There’s already a thread on this:
And the well-thought out replies provide a logical explanation as to why the strategy doesn’t work.
xx
"College Financial-Aid Loophole: Wealthy Parents Transfer Guardianship of Their Teens to Get Aid "
"CHICAGO—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."
“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.” …
Scroll up. All of the threads on this have been merged together…and there are some good explanations given above…particularly the ones by Kelsmom.
There’s no such thing as a court-“approved” guardianship. Any guardianship is court-appointed, even if (as is the case most of the time) the guardian is a relative or close friend of the parent(s) and everyone is in agreement. That’s not why this doesn’t work. If this doesn’t work, it’s because there’s actual fraud going on – the parents are continuing to support the child, the child is living with the parents, and there’s no substance to the guardianship beyond financial aid eligibility.
It’s clear, too, that this is not simply a case of a custody agreement, or Junior living with Uncle Joe. The linchpin of this whole scheme is that everyone went to court and got a guardian appointed. Judges signed the orders. Maybe they shouldn’t have, but in family court it is pretty unusual for a judge to stand in the way of something a teenager, both parents, and a prospective guardian who is close to the family are requesting.
The WSJ article is in the NASFAA newsfeed this morning. I would be interested in finding out what other financial aid professionals have to say about it, but it wasn’t posted in a manner that allows comments. My experience with guardianship issues is from working at a school that carefully vetted all students whose only claim to independent status was guardianship or ward of court. If a school doesn’t actively vet these claims, they could miss them - which is not good, because believe it or not, there are 17 year olds who don’t understand that parent and guardian are not the same thing - in other words, they make a mistake. It is also possible that some of the guardianships could have met the requirement from a legal (but not moral or ethical) standpoint … the ones I saw in the article did not, but I didn’t see all of them. The reasons I saw would have had me denying the independent status for sure.
People can really be scum, can’t they?
This is crazy! from here:
https://www.propublica.org/article/university-of-illinois-financial-aid-fafsa-parents-guardianship-children-students
I am outraged.
But this is creepy, a bit.:
A high school counselor knows a student’s income level? Well enough to challenge it to a college?
I am glad the counselor was doing his/her job. Those programs are for needy kids who can’t afford to visit a school, so it is helpful for colleges to know if they are targeting the wrong kids or fraud is occurring.
@roycroftmom I get this counselor was right in this case, but is that in fact a high school counselor’s job? IMO, this should be the job of the college’s FA office. How would a high school counselor know a particular student’s family finances well enough to make that call? It seems off, to me, from a privacy standpoint.