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Suburban parents reportedly giving up custody of kids to get need-based financial aid

By Sarah Schulte, ABC7 News

Wealthy suburban parents in the Chicago area are using a legal loophole in order to get their children more need-based financial aid, according to a report by ProPublica Illinois.

The report discovered dozens or more cases where parents hired lawyers to petition the court to turn over guardianship to a friend or relative so the student could be declared financially independent and qualify for financial aid.

ProPublica Illinois reporter Jody Cohen said she sifted through 1,800 probate petitions from 2018 and 2019, but more than 40 guardianship petitions stood out to her.

They were formal petitions filed by lawyers on behalf of well-to-do parents who were, for example, doctors and real estate agents in suburbs like Buffalo Grove and Deerfield, giving up custody of their kids during their junior or senior year of high school.

Lake County court records show parents giving up their rights to someone they say can provide their children with “financial and educational support” better than they can. The children can then get financial aid they wouldn’t otherwise get.

In response, the Department of Education is suggesting changes be made to close the loop hole.

It’s adding language that says if a student enters into a legal guardianship, but continues to receive financial and medical support from their parents, they are still a dependent student.

While the practice of doing this is a loophole, it is not illegal. But it sparks an ethical problem if financial aid is limited and takes away from a potential student with a real need.

Kyle Westbrook leads the Partnership for College Completion, an advocacy organization for improving college outcomes for low income students.

“We think of it as hundreds of thousands of dollars that should have gone to low-income students and likely the difference between some students going to college and not going,” said Westbrook.

Last year, more than 80-thousand students who were eligible didn’t get the aid because the money ran out.

For low income students that could mean the decision not to go to college.

This article originally appeared on ABC7 News.


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