On the heels of the college admissions scandal, last week ProPublica uncovered dozens of suburban Chicago families exploiting dependency status rules in the financial aid application process to their benefit. Indirectly implicated in the Illinois scandal are need-based financial aid programs, like the state’s Monetary Award Program (MAP), which may be awarding already-limited state dollars to students who may not, in reality, be eligible. This blog post gives a quick overview of what state lawmakers need to know about the scandal and how to formulate next steps.
What happened: When a student applies for federal financial aid, they answer a series of questions to determine if their parent needs to provide their financial information. The majority of students matriculating directly from high school to college are classified as dependent — meaning their parents must provide their income and asset information. Federal rules allow for students in extraordinary circumstances to be classified as independent — meaning only the student will provide their information on the form. These situations include, for example, being in foster care or being homeless. Another way that a student can exclude their parent’s financial information is by being in guardianship. The ProPublica investigation uncovered families that had gone through the legal process of granting guardianship of their minor children to another adult so that the student would be considered independent in the aid application process.
What it means: Independent students only need to report their own income and assets on their aid application, along with that of their spouse if the student is married. Because many students matriculating directly from high school to college likely have low income and limited assets of their own, their aid applications would qualify them for need-based federal, state and institutional aid. This would be in the form of Pell Grants, and, if the student is from one of the 49 states that offer need-based aid, a state grant, plus any institutional dollars.
Why it matters: Recent research estimates that nearly a million students who are eligible for state financial aid never receive it because of chronic misalignment between state aid eligibility rules and state funding for the programs; in the majority of states, there are many more eligible students than available awards. In most state contexts, families using the guardianship scam are taking limited resources from the pockets of students who could not otherwise afford college.
Why it also may not matter: Policy leaders may consider the scope of this scandal against the overall backdrop of state financial aid. In 2017, 121,579 students received support from the Illinois MAP program. Even if 100 families went through this legal process, that represents .0008% of total recipients. While waste should always be avoided, policy leaders should be honest about how their limited time and resources during and out of legislative session may be used to best serve all students.
What can be done: Policy leaders in any state seeking to act in response to the Illinois scandal may consider the following options:
- Maintain alignment with the federal aid process. Many agree that simplifying the application process for financial aid serves all students well, especially those from low-income backgrounds. To achieve this, most states align with information that students already submit on their Free Application for Federal Student Aid to award state aid. In fact, over three-quarters of state aid is disbursed based on information a student submits on the FAFSA. Decoupling the state aid application process from the federal application process is very likely to cause more problems than it solves.
- Examine legal rules for guardianship in your state. The dependency status rules on the FAFSA only function if the legal system granting guardianship of minor children is carried out with fidelity to the law. We have more to learn about the families implicated in the Illinois scandal, including which judges heard the cases and what grounds the families used as justification for the change. This information should likely inform efforts to mitigate the scam.
We will keep our ear to the ground for further developments and are available to consult on possible responses to the scandal. Please don’t hesitate to reach out if we can be of assistance.