Controversy in Financial Aid: Legal Guardianship Issues

It is no secret today that college keeps becoming more and more expensive to attend. Students and their families have to search harder every year for ways to pay for their degree without going into debt. Unfortunately, though, for some families, this can also mean circumnavigating the system.

Recently, there has been a lot of controversy regarding legal guardianship in Chicago and how it affects financial aid. An investigation has unearthed cases where wealthy families have been legally transferring guardianship to other families, allowing the student to claim legal guardianship on the FAFSA. This, in turn, leads to that particular student becoming Pell-eligible and showing a high level of financial need, as it is only counting the student’s income information on the FAFSA at that point. However, it has been discovered that many of these students are still being fully supported by their parents but are also reaping the financial aid benefits of not legally being under their care.

It is not known at this point to what degree this is happening across the country, but Google results for ‘how to transfer guardianship’ have escalated since the news stories have come out regarding these issues.

Is it legal? Technically, yes – legal guardianship is a court proceeding and students in this situation would be answering the FAFSA question properly in regard to whether they are under legal guardianship.

But is it ethical? Many student affairs administrators and financial aid professionals argue that while in legality, this is technically correct, but because these students are still being financially supported by their parents despite the legal paperwork, they are perhaps taking away aid from students who do not have the same type of support, especially when it comes to very limited-funded state and institutional financial aid programs.


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