Weighing Responses to Latest Higher Ed Scandal

State lawmakers scrutinize steps to address a legal loophole used by some affluent Illinois families to improperly gain access to aid. But financial aid groups warn against overreaction that would hurt low-income students.

August 12, 2019
 
University of Illinois

Illinois House lawmakers took a first look last week at potential responses to a scandal that’s unfolded over affluent families’ efforts to game the student financial aid system.

Outraged lawmakers called a joint hearing of two higher education committees after ProPublica Illinois and The Wall Street Journal reported that dozens of affluent families in the Chicago suburbs had given up legal guardianship of their children so that they could be declared financially independent and qualify for more aid money.

College officials pressed by lawmakers recommended that the legislature could give them more discretion to block state need-based grant aid when students improperly pursue legal guardianship. Some lawmakers, though, sounded unsure about taking that step. They also suggested that the Legislature re-evaluate legal guardianship laws and consider regulating independent college consultants.

And officials at national financial aid and student access groups cautioned in interviews against responses that could have unintended consequences for low-income students.

“I’m absolutely aware that we could have an overreaction to what is an egregious but localized issue that would negatively impact all legal guardianships, including legitimate ones,” said Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators.

The reporting on the issue suggested roughly four dozen families had given up legal guardianship of their children shortly before they turned 18. That’s an exceedingly small number compared to the total number of financial aid applicants each year. And there’s little evidence so far that other institutions in the state have had similar cases.

But the stories came out as members of the public have become highly aware of efforts by rich families to cheat the system in the wake of a massive admissions scandal this year involving elite colleges.

Illinois lawmakers were also troubled by potential improper use of legal guardianship because the state’s need-based grant, the Monetary Award Program, has limited funding. If the program runs out of funding, low-income students who would qualify don’t receive aid. Last year, 82,000 students who met eligibility standards didn’t receive MAP grants because funding had run out, ProPublica reported.

One lawmaker, State Representative Carol Ammons, said the rising costs of higher education should not be overlooked.

“A system that drives families to cheat is a broken system,” she said.

Colleges’ Tools to Deal With Misrepresentation

Draeger said colleges already have some tools at their disposal to respond to misrepresentation. If financial aid officials suspect that a student received legal guardianship solely for the purpose of financial aid, they are well within their rights to ask if the student received financial support from parents.

“If a school has more than a suspicion, if they have conflicting information, then the school is required to resolve that conflicting information,” Draeger said.

NASFAA issued new guidance to members recently detailing those potential responses. The organization discouraged colleges from requesting additional documents from any student who reported legal guardianship status, as it considers the vast majority of those cases to be legitimate.

In May 2018, University of Illinois officials adjusted an independent student’s financial aid award after extra scrutiny found that his parents were still providing financial support. Andy Borst, the university’s director of undergraduate admissions, told lawmakers last week that university officials also reported the case to the Department of Education’s inspector general and the Illinois attorney general.

The discovery of other cases afterward prompted the university to add safeguards to detect other misrepresentations. But while colleges can limit institutional scholarships awarded to those students, they can’t change awards for state aid like the MAP grant or federal programs like the Pell Grant.

Illinois uses the Free Application for Federal Student Aid to assess students’ eligibility for financial assistance. The U.S. Department of Education’s Office of Inspector General recommended adding language to the Office of Federal Student Aid’s handbook that makes clear a student receiving financial support from a parent would not qualify as independent for purposes of the FAFSA.

“That proposal addresses the problem from our perspective without becoming overly reactionary,” said Carrie Warick, director of policy and advocacy at the National College Access Network.

Along with calls for more authority to limit financial aid, colleges asked lawmakers last week to re-evaluate state guardianship laws. Warick said it would be concerning if legal guardianship status broadly came under suspicion or was targeted for blanket verification when students apply for financial aid. Many of the students who receive the status have a parent unable to care for them because of circumstances like a substance abuse or mental health disorder but have other family members who are able to support them.

“Legal guardianship itself is a very important and useful thing for children who need it,” she said. “It’s not something that was created with financial aid or higher education in mind.”

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