Loophole allows families to get aid meant for needy students - Insurance News | InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Newswires
Topics
    • Advisor News
    • Annuity Index
    • Annuity News
    • Companies
    • Earnings
    • Fiduciary
    • From the Field: Expert Insights
    • Health/Employee Benefits
    • Insurance & Financial Fraud
    • INN Magazine
    • Insiders Only
    • Life Insurance News
    • Newswires
    • Property and Casualty
    • Regulation News
    • Sponsored Articles
    • Washington Wire
    • Videos
    • ———
    • About
    • Meet our Editorial Staff
    • Advertise
    • Contact
    • Newsletters
  • Exclusives
  • NewsWires
  • Magazine
  • Newsletters
Sign in or register to be an INNsider.
  • AdvisorNews
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Exclusives
  • INN Magazine
  • Insurtech
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Video
  • Washington Wire
  • Life Insurance
  • Annuities
  • Advisor
  • Health/Benefits
  • Property & Casualty
  • Insurtech
  • About
  • Advertise
  • Contact
  • Editorial Staff

Get Social

  • Facebook
  • X
  • LinkedIn
Newswires
Newswires RSS Get our newsletter
Order Prints
July 30, 2019 Newswires
Share
Share
Post
Email

Loophole allows families to get aid meant for needy students

Associated Press

The U.S. Education Department is being urged to close a loophole that has allowed some wealthy families to get federal, state and university funding that's meant to help needy students.

Federal authorities were notified last year that some parents in Illinois were transferring custody of their children to friends or relatives to make it appear they came from poorer backgrounds and to make them eligible for more financial aid.

Disclosure of the practice comes at a time of intense debate over the fairness of college admissions. Earlier this year, federal authorities say they uncovered a sweeping scheme in which wealthy parents paid bribes to get their children into elite universities across the nation .

In the latest case, officials at the University of Illinois reported the scheme to the Education Department's independent watchdog after finding several cases there. In total, the school says it has found 14 students involved.

Andy Borst, the university's director of undergraduate admissions, said the strategy appears to be legal but ethically questionable. By tapping into funding for needy students, he said, wealthy families are depriving students who legitimately need the help.

"Financial aid is not infinite," he said. "There are students who are eligible for need-based aid who are not receiving their awards because the state runs out."

The Education Department's inspector general declined to say whether it's investigating. But it's recommending that the department add new language to its rules to close the loophole.

Under the proposed language, changes of guardianship would not be recognized by the department "if a student enters into a legal guardianship but continues to receive medical and financial support from their parents."

Department officials did not immediately comment to say whether the change would be implemented.

The scheme, which was first reported by Pro Publica and The Wall Street Journal, has been traced to clusters of parents in Chicago suburbs. It's unclear how widespread it is being used.

According to the news organizations, some parents were advised to pursue the strategy by a college consulting firm called Destination College, based in Lincolnshire, Ill. The company did not return a request seeking comment.

Mark Sklarow, CEO of the Independent Educational Consultants Association, says both the transfer of guardianship and the college bribery scandal are symptoms of the spiraling cost of college tuition. Still, he said the custody scheme is unethical and unfairly robs students of actual need.

"Guardianship laws are designed for when parents are unable or should not be responsible for a child's well-being," he said. "It isn't something that is meant to be traded away in order to beat the system."

The University of Illinois is still deciding whether to provide its own need-based aid to students who have used the scheme, but officials say they're required to continue channeling Pell Grants and other federal student aid to those students.

In the meantime, the school has added new questions for applicants who have had changes in guardianship, asking who pays their cellphone bills and medical insurance. But the school is wary of making the process overly complex for students who really need help.

Borst said he knows of at least five other Illinois schools that have uncovered the scheme but declined to say which ones. Sklarow, of the consultants association, said he hadn't heard of it outside Illinois.

Follow Collin Binkley on Twitter at https://twitter.com/cbinkley

Newer

Detroit debate could make or break a candidate: Michigan is home to many flubs

Advisor News

  • I started using AI, but what now?
  • How to support an entrepreneur client with multiple businesses
  • Could a narrower focus help grow your practice?
  • U.S. debt hits $40 trillion: how to support concerned clients
  • Flourish brings private-bank-like cash solution to MassMutual’s network
More Advisor News

Annuity News

  • MassMutual Expands Lending Options With New Secured Credit Line
  • Corebridge Financial Introduces Progressive Trigger, a First-of-Its-Kind Index Annuity Strategy Designed to Turn Missed Years into Future Opportunity
  • Insurer proposes $1.1M deal to resolve CA teachers’ annuity fee lawsuit
  • IMOs get frustrated with slow carrier adoption of faster technology
  • New class-action lawsuit targets Delaware Life over annuity disclosures
More Annuity News

Health/Employee Benefits News

  • Hawthorne School Budget Faces New Pressure As Health Insurance Costs Jump Nearly 34%
  • Half the Coverage: What the TLC's Rideshare Insurance Cut Means for Queens Riders
  • Answering questions on Medicare open enrollment Terry Savage: Your questions answered on Medicare open enrollment
  • Make sure your Medicare coverage makes sense Jill On Money: Medicare on my mind
  • RESURFACED AUDIO: MIKE ROGERS SAYS HE WANTS TO KICK SICK PATIENTS OFF HEALTHCARE, SUPPORTS NEW COPAYS – MICHIGAN DEMOCRATIC PARTY
More Health/Employee Benefits News

Life Insurance News

  • Virginia orders Atlantic Coast Life to halt new business Nov. 1
  • AM Best Affirms Credit Ratings of China Taiping Insurance (Singapore) Pte. Ltd.
  • AM Best Upgrades Credit Ratings of Fidelity Life Association, A Legal Reserve Life Insurance Company; Affirms Credit Ratings of Industrial Alliance Insurance and Financial Services Inc. and Its Life/Health Subsidiaries
  • 777 Partners founder pleads guilty to $500 million fraud scheme
  • AM Best Affirms Credit Ratings of Luen Fung Hang Insurance Company Limited
Sponsor
More Life Insurance News

NEWS INSIDE

  • Companies
  • Earnings
  • Economic News
  • INN Magazine
  • Insurtech News
  • Newswires Feed
  • Regulation News
  • Washington Wire
  • Videos

FEATURED OFFERS

Press Releases

  • Benefits Studio Launches to Fill the Missing Middle of Benefits Navigation at $49/mo
  • Lauren Sinnott Named to Ragan’s Top Women in Marketing Awards, Class of 2026 
  • Classic Car Insurer OpenRoad Insurance Expands to 40 U.S. States in Two Years
More Press Releases > Add Your Press Release >

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Advisor News
  • Annuity Index
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • From the Field: Expert Insights
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Magazine
  • Insiders Only
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Washington Wire
  • Videos
  • ———
  • About
  • Meet our Editorial Staff
  • Advertise
  • Contact
  • Newsletters

Top Sections

  • AdvisorNews
  • Annuity News
  • Health/Employee Benefits News
  • InsuranceNewsNet Magazine
  • Life Insurance News
  • Property and Casualty News
  • Washington Wire

Our Company

  • About
  • Advertise
  • Contact
  • Meet our Editorial Staff
  • Magazine Subscription
  • Write for INN

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2026 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • InsuranceNewsNet Magazine

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.