New College Scam: Giving Up Custody for Cash

Just when you thought it couldn’t get any worse!  Recently we wrote about the Rick Singer college admissions scandal where parents bribed college coaches to pretend to give their children athletic scholarships so they could be admitted to colleges that, absent the artifice, they likely would not be admitted to.  [See Admissions Scandal: When Entitlement Buys Acceptance”]

Now, it is being widely reported that parents, especially in Chicago suburbs, are transferring guardianship of their high school-aged children to friends and relatives so that the children can claim to be independent and qualify for need-based financial aid for college.  One couple making more than $250,000 a year transferred guardianship so that the child needed to report only $4,200 in income that she earned in her summer job.  Such guardianships are easily accomplished and many parents who have used this scam live in homes valued north of a million dollars.  An outfit called Destination College apparently created the strategy and two law firms have done most of the legal work.

Some are attempting to defend the practice on grounds that (a) it is legal (we hope not), and (b) it is ethical (no way!).

From a deontological point of view, this practice seems unethical because clearly the parents are engaged in deception.  They are not in any meaningful sense actually transferring guardianship of their children.  They are only pretending to.  The children are claiming on college applications that they are independent, when they continue to live under their parents’ roofs, just as before.  That is fraudulent.  That cannot be defended on deontological grounds.  Kant, who said that “[b]y a lie, a man…annihilates his dignity as a man,” would be horrified.

From a utilitarian point of view, this practice seems unethical because it produces very poor results.  It is unfair, advantaging the wealthy to the detriment of the less wealthy.  Poor people cannot benefit in this way by transferring guardianship of their children.  Only the relatively wealthier can.  When need-based scholarship money goes to wealthier families who are only pretending to be poorer, the whole purpose of need-based scholarships is subverted.  The people we know who have donated money for need-based scholarships were not doing so with the idea that their funds would go to children whose parents were only pretending to be needy.  In their defense, these parents may say: “Well, my kid is better off now that I’ve pretended to transfer guardianship,” but Jeremy Bentham spoke of the greatest good to the greatest number being the measure of right and wrong, not the greatest good to my own child.

And if we consider virtue ethics, well, how virtuous is it to pretend that your kid is poor so that you can send her to school without paying money yourself, knowing that the aid your kid gets will now not go to another kid whose parents truly do need it?  Aristotle said that we become just by doing just acts, not by gaming the system and exploiting loopholes in order to cadge financial aid meant for others who are more deserving.

When asked about the practice, Andrew Borst, director of undergraduate enrollment at the University of Illinois said: “This is legal, but we question the ethics.” Ya think?

Whether parents are lying about their child’s athletic ability to get them into a college they don’t deserve to get into or lying about their child’s financial stability to pay for that college, it’s pretty unattractive behavior.

Our interest in behavioral ethics focuses on how parents, admissions counselors, and lawyers can decide to engage in this activity.  Most residents of Chicago suburbs think of themselves as good people.  Albert Bandura says that these folks mostly won’t do bad things unless they can somehow disengage their normal moral self-sanctions, like feelings of guilt, from their actions.  Rationalizations and other mechanisms of moral disengagement come in handy here.

An attorney who files such guardianship papers said: “The guardianship law was written very broadly.  Judges were given an immense amount of discretion.  The standard is, best interest of the child, and I think it’s hard to argue that this is not in the student’s best interest.”  Not faulting the judges, but by this standard, robbing a bank and using the proceeds to pay your kid’s tuition would be “in the student’s best interest.”  That wouldn’t make it moral.

A man who agreed to be a guardian felt conflicted.  He said that he wanted to help his friends’ daughter, but wanted to “do the right thing.”  He went forward when he was told that the scheme would not deprive someone else of financial aid.  But of course it did; financial aid funds are finite.  The man accepted this transparent lie because he wanted to, not because it was true.  Because the man could not know the name or see the face of the more deserving student who would be deprived of financial aid because of the scheme, the tangible & abstract phenomenon allowed him to let himself off the hook for the part he played.

Another attorney at the law firm and the owner of Destination College both protested that million-dollar houses aside, most of their clients are “middle class.”  One suspects that the definition of middle-class in wealthy Chicago suburbs might not be broadly shared.  We’re reminded of a letter to the editor here in Austin by a physician’s wife who lived in a house the size of Cleveland and protested that people just didn’t understand how hard it was to scrape by on $600,000 a year.  And that was 20 years ago when $600,000 was real money.  If these are truly struggling middle-class families, they should apply for need-based aid using accurate financial numbers.  They might get the aid.  They might lose out to families who are even needier.  If so, well, that’s what should happen in a just world.

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Resources

Bandura, Albert, Moral Disengagement: How People Do Harm and Live with Themselves (2016).

Belkin, Douglas, “College Financial-Aid Loophole: Wealthy Parents Transfer Guardianship of Their Teens to Get Aid,” Wall Street Journal, July 29, 2019, https://www.wsj.com/articles/college-financial-aid-loophole-wealthy-parents-transfer-guardianship-of-their-teens-to-get-aid-11564450828.

Cohen, Jodi & Sanchez, Meliaa, “Parents Are Giving Up Custody of Their Kids to Get Need-Based College Financial Aid,” Pro Publica, July 20, 2019, https://www.propublica.org/article/university-of-illinois-financial-aid-fafsa-parents-guardianship-children-students.

Quintana, Chris, “Another College Admissions Scandal? To Get Financial Aid, Parents Lose Custody of Children,” USA Today, July 30, 2019, https://www.usatoday.com/story/news/education/2019/07/30/college-financial-aid-custody-transfer-guardianship-loophole-admissions-scandal/1868220001/

Rhodes, Dawn, “Parents Transferring Custody to Get Better College Financial Aid? ‘It Never Occurred to Us That This Was a Possibility,’” Chicago Tribune, July 30, 2019, https://www.chicagotribune.com/news/ct-legal-guardianship-college-financial-aid-20190730-3wojx5xr5jendferi76tcehzma-story.html.

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