Affluent parents surrender custody of their kids to "scam" their way into needs-based college scholarships

Propublica Illinois has identified "dozens of suburban Chicago families" who surrendered custody of their children during the kids' junior and senior years of high-school, turning them over to aunts, grandparents, friends, and cousins, so that the kids claim to be independent and qualify for needs-based scholarships, crowding out the poor kids the scholarship was designed for.

The scheme (called a "scam" by Urbana-Champaign director of undergraduate admissions Andy Borst) allows affluent kids to qualify for the Pell Grant and the state Monetary Award Program (MAP grant), up to $11,000/year. The total amount available through these grants is capped and they are awarded on a first come, first serve basis. 82,000 eligible Illinois students were excluded from the program last year because the money ran out.

Propublica identified two key enablers of the "scam": The Rogers Law Group in Deerfield and the Kabbe Law Group in Naperville (Rick Rogers of the Rogers Law Group hired a third firm to handle his own family's case).

The parents involved declined to comment, as did the Rogers Law Group. The Kabbe Law Group said that her firm's services allows kids to get aid where the families are in "a financial position where their income is too high to qualify for financial aid but they still will struggle to pay for college."

Propublica also identifies Lora Georgieva, owner of Lincolnshire Destination College consulting firm, as a key enabler, noting she has ties to several of the families and to Rogers. Destination College advertises a "College Financial Plan, Using Income and Asset Shifting Strategies to Increase Your Financial and Merit Aid and Lower Out of Pocket Tuition Expenses." When reached for comment, Georgieva had an attorney contact Propublica to express her concern that her services would be "depicted in a false light."

The guardianship process the families are exploiting is intended as a way of getting children out of dangerous situations where they face physical, emotional and sexual abuse.

Christian Basi, a University of Missouri spokesman, said the school is investigating to ensure that guardianships are not filed “simply to try and gain financial advantage.” He said university officials are flagging accounts that may have benefited from this practice and have been in contact with other schools in the Midwest.

“We are and would be extremely disappointed with anyone who would try to change their information with the sole purpose of taking money from a need-based program when they would typically not be eligible,” he said.

A spokeswoman for the University of Wisconsin-Madison said the university may review and adjust its financial aid award at any point if evidence emerges that a student is actually receiving parental or other financial support not reported on the FAFSA.

Parents Are Giving Up Custody of Their Kids to Get Need-Based College Financial Aid [Jodi S. Cohen and Melissa Sanchez/Propublica]