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'It's Just Wrong': Wealthy Families Accessing Need-Based Financial Aid

Sean Powers/Illinois Public Media
Students at the University of Illinois at Urbana-Champaign on April 25, 2014.

University of Illinois officials say they will take extra steps to vet financial aid applications from students involved in guardianship cases. The decision comes after university officials identified 14 instances in which parents had a student put under the guardianship of a friend or relative so they could qualify for more financial aid. 

ProPublica Illinois and the Wall Street Journal broke the news earlier this week that wealthy families from Chicago suburbs were using guardianship status to qualify their children for need-based financial aid — including aid from federal, state and institutional sources. State lawmakers have since called for a hearing to get more information and discuss ways to close the guardianship loophole, according to ProPublica Illinois. 

Andy Borst, director of undergraduate admissions for the U of I, said the university will likely withhold institutional financial aid from students identified in the review as having additional resources. University officials say they contacted both the U.S. Department of Education and the Illinois Student Assistance Commission about the issue after it was discovered. 

Michelle Trame, director of student financial aid for the university, said the U of I has withdrawn need-based financial aid from four students involved in guardianship cases. 

She said it became clear that these students would not have qualified for income-based financial aid if they were not placed under guardianship status. Trame said both the state and the U of I have limited need-based aid to offer students. 

“We don’t have an unlimited pot of need-based funds, so we are not able to meet the need of all of our students,” she said. She called the practice of gaming the system to qualify otherwise affluent students for need-based aid “frustrating, concerning… and it’s just wrong.”

Illinois Public Media interviewed Andy Borst about the issue and what next steps the safeguards the university plans to put in place to protect against manipulation of the need-based financial aid system.

This interview has been lightly edited and condensed for clarity.

LG: How did you first find out that affluent parents were placing their children in guardianship status to qualify them for need-based financial aid?

AB: I got a call from a few counselors. They were asking questions about our orientation program and Illinois Promise, our grant program, which are not typical for students from that high school or that group of high schools. And so that was the first tipping point. We were like, ‘Wow, that's really odd.’ And so we started to look into those schools and who would have gotten Illinois Promise. Then the Office of Student Financial Aid did a really good job of doing the investigation. They saw some of the commonalities of students from Will County who entered into guardianship in their junior year of high school. We started to ask some more questions. And that's when we notified the U.S. Department of Education’s Inspector General's Office about our concern.

LG: Did you learn that these students were from families that wouldn't normally qualify for income based financial aid? 

AB: Correct.

LG: What next steps did the university take after they discovered this?

AB: Working with our own attorneys, the Office of Student Financial Aid developed some additional screening for students who enter into a guardianship to ascertain how much additional resources are available to them from their parents. What our legal counsel said was that this is a legal process; students lawfully transferred guardianship from their parents to another individual. The Office of Student Financial Aid can use their discretion on whether to award need-based student financial aid to the students. But we are still obligated to give them the federal Pell Grant as well as the state’s (Monetary Assistance Program) grant.

LG: And so while the university has discretion to offer need-based financial aid above that number, the university cannot prevent students from accessing those state and federal dollars?

AB: Correct.

LG: Are there going to be safeguards in place to guard against something like this from happening in the future?

AB: I believe we're on that path. Protecting from wealthy parents manipulating the financial aid process to get need-based aid they wouldn't otherwise be eligible for, that's what we're trying to achieve without putting additional barriers in front of students that are in guardianships who were removed from a family because of a health and safety concern.

So we're trying to have that balance of: how do we be good stewards of institutional resources without creating additional administrative barriers for low-income students who are in bad situations? What we're hopeful about in bringing this to light is that there seems to be movement happening at the federal level and at the state level with legislation to hopefully make it so that students who are entering into guardianship for the purposes of student financial aid will no longer be eligible for Pell and MAP Grants.

LG: I imagine you regularly talk to students who are in situations where they really need as much financial aid as possible. What's your reaction to the fact that it appears that wealthy families are manipulating the system to get some of these limited resources?

AB: I think people just kind of assume that financial aid is infinite when indeed it's not. Money that we are giving to students who are entering into these guardianships to receive need-based aid they would not otherwise be eligible for is money that's not going to students that have true financial need.