Parents Trading Custody For Financial Aid – Working Class Parents can’t afford College for their Children
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Dozens of well-off families in the Chicago suburbs got extra financial aid from the University of Illinois and other colleges by strategically giving up custody of their kids, sometimes months before their child turned 18.
Lake County, in the suburbs of Chicago, is one of the wealthiest in the state. That’s why it came as a surprise when news surfaced last week that the Lake County courthouse had a number of unusual custody cases.
It turns out more than forty families transferred custody of their high school children in order to get college financial aid for which they wouldn’t otherwise have been eligible – in some cases, months before the child turned 18.
Parents involved include doctors, lawyers, and insurance agents earning hundreds of thousands of dollars a year. Similar custody-for-financial-aid cases have surfaced in McHenry County, also home to affluent Chicago suburbs.
Jodi Cohen, a reporter with ProPublica Illinois, was one of the journalists who first broke the story. Andy Borst is director of undergraduate admissions at the University of Illinois at Urbana-Champaign, where they’ve identified at least 14 possible custody-for-financial-aid cases. Natalia Abrams is the executive director of StudentDebtCrisis.org, where she advocates for student debt reform.
“The average debt in Illinois is $29,000 and it’s only been increasing,” says @nataliaabrams. “Folks with $250k don’t necessarily have that laying around. We’ve been seeing a struggle with the upper middle class because they can’t qualify for aid and they can’t afford the cost.”
— The 21st (@21stShow) August 5, 2019
Pizaz – a different perspective from someone that has not read deeply about the above parents, but can offer information on paying for college:
Two working ‘middle class’ parents, or ‘wealthy parents’ depending on who is defining their status might have debt, medical bills, other family members to support, laid off from work, under-employed, repair bills on their homes, divorce, separation, and other reasons that make it difficult to afford a college education at a private school – or often a public University for their child.
Average people in their forties, having worked twenty years, and moved their way up into supervisor, management, or owner positions, make money. – what used to be called ‘a decent income’ In suburban areas outside of cities, NY, Chicago, California, houses and living expenses are quite high. Two parents often earn over $100,000. They also often accumulate debt because that is not enough money to live on in the suburban areas. Mortgage rates were lowered since the 2000’s and people moved into houses they could afford based on the income they had.
For the above reasons, and others, some parents might choose to have a relative or friend be the guardian of their child so that the child can qualify for financial aid. These parents do not always have discretionary, disposable income or extra monies to save for their child’s education.
Years ago, undergraduate students were advised to declare that they are independent from their parents so that they can qualify for financial aid. This is the evolution of that advice. Today’s financial aid guidelines at FAFSA require the student to be at least 24 years old to be ‘independent”
from FAFSA site – https://studentaid.ed.gov/sa/fafsa/filling-out/dependency
Your dependency status determines whose information you must report on the Free Application for Federal Student Aid (FAFSA®) form.
- If you’re a dependent student, you will report your and your parents’ information.
- If you’re an independent student, you will report your own information (and, if you’re married, your spouse’s).
The federal definition of an independent student is one who meets at least one of the following criteria:
- You are working on a degree beyond a bachelor’s, such as a master’s or doctorate
- You have a child or children, or other legal dependents, who receive more than half their financial support from you
- You are married (or separated but not divorced)
- You are at least 24 years old
- You are a veteran of the United States Armed Forces
- You are currently serving on active duty in the Armed Forces for other than training purposes
- If, at any time since you turned 13, both your parents were deceased, your were in foster care, or were a ward of the court
- You are an emancipated child as determined by a court judge
- You are homeless or at risk of homelessness as determined by the director of a HUD approved homeless shelter, transitional program, or high school liaison
If you do not meet any of those criteria, you are required to report parental information on your FAFSA, meaning you are classified as a dependent student.
Most undergraduate students are under 24 years of age, not married or homeless. The FAFSA form is going to calculate how much the parents or guardians can afford to contribute to the cost of their dependent child’s college expenses (tuition and living expenses). It will also calculate an amount of how much the student can contribute.
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Save money on books, school supplies and everything you want to enjoy college! Financial aid, back in the olden days meant grants, scholarships, work study jobs. Loans were part of the package, but since they are available, ‘common thought’ was it is not financial aid – it was however a low interest loan. If you’re dependent on your parents, and they are below a certain income, most colleges give you much monies to help you attend their school. The middle class student with 2 working parents pays much more for their child to attend school and that student often can’t get work study job on campus. Those jobs are limited to the kids with financial aid.
If you can, or your parents can, to lower your loan debt when you leave school, if you have any monies, try to pay at least the interest while you are in school. Many loans start adding interest the day they are used to pay for school. So a $10,000 loan becomes a $12,000 amount when you leave school (example each loan is different) If you pay the interest (example $25 per month) then the $10,000 loan is only $10,000 when you leave school.