Parents in Illinois Sign Over Custody to Gain Need-Based Aid, ProPublica Report Finds

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Update: The United States Department of Education announced on Tuesday that it is taking steps to address the “potential student aid fraud” first reported by ProPublica Illinois on July 29. The department’s Inspector General recommends revising financial aid guidelines to clarify that students under a guardian’s custody who continue to receive financial support from their parents are not considered eligible for the same need-based aid awarded to independent students.

An investigation by nonprofit news agency ProPublica Illinois recently uncovered a number of cases in which middle- and high-income parents relinquished custody of their children shortly before they enrolled in college in an apparent attempt to qualify for need-based financial aid.

The University of Illinois at Urbana-Champaign has identified 14 applicants who match this profile after a phone call from a guidance counselor in an affluent Chicago suburb raised suspicions last year, according to the report.

Read the full report here.

John Borst, director of undergraduate admissions, told ProPublica Illinois that the school then reviewed records for students in similar situations and found others that matched a specific profile: successful students from seemingly supportive backgrounds who had been relinquished from their parents’ custody to that of a relative or family friend.

Borst told ProPublica Illinois that such cases are “a scam.”

The news agency has identified more than 40 guardianship cases across several affluent Chicago suburbs that match this profile. Most of the cases were handled in court by two law firms, the Rogers Law Group in Deerfield, Illinois and the Kabbe Law Group in Naperville, Illinois.

Mari Berlin, a lawyer with the Kabbe Law Group, told ProPublic Illinois that her firm has filed 20 to 30 such guardianship cases for families whose income is too high to qualify for financial aid but whose financial situations render them unable to pay for college out of pocket. She told the agency that in such cases, relinquishing custody does serve the best interests of the child, which is what guardianship laws are intended to do.

Berlin also stated in a court brief last year that one of the families she was representing had been advised by a “Certified College Planner” to relinquish custody, the agency reported.

ProPublica Illinois spoke with one guardian on the condition of anonymity who told the agency he turned to advice from a college consulting company before reluctantly assuming custody of a family friend shortly before she turned 18. The company, Destination College, offers services that include tips on financial planning and “Using Income and Asset Shifting Strategies to Increase Your Financial and Merit Aid and Lower Out of Pocket Tuition Expenses,” according to the report.