Lawmakers Question University, State Officials About Misuse Of Need-Based Financial Aid System

State lawmakers expressed outrage during a legislative hearing Thursday over the issue of affluent families from Chicago suburbs transferring guardianship of their children to another adult in order to qualify them for need-based financial aid they otherwise wouldn’t receive. 

The hearing in Chicago was called after ProPublica Illinois and the Wall Street Journal reported on the practice. ProPublica Illinois identified more than 40 guardianship cases in Lake County filed between January 2018 and mid-2019 that appear to fit this profile. 

“It’s unfortunate our parents are teaching our children how to cheat the system,” said State Rep. LaShawn Ford, a Chicago Democrat. “If nothing else, the message is out that we don’t agree with this.”

While university, state officials and higher education advocates condemned the practice, they also urged lawmakers to proceed with caution. They expressed concern that an overcorrection would place undue burdens on students with legitimate guardianship status.

Kate Danielson, executive director of Foster Progress, an Illinois group that helps foster children transition into adulthood, shared the story of a 19-year-old single mom who struggled to get financial aid as a result of her guardianship status. 

“(The university) asked for a court order proving she is a ward of the state. They asked for her budget, her rental agreement, her pay stubs. She’s 19 years old and, as you can imagine, she doesn’t have a nice filing system. She doesn’t have these documents, she doesn’t know how to get them.”

Danielson said she helped usher the woman through the process. A bill for tuition arrived before her financial aid, and while she was still able to register for classes, she wasn’t able to purchase the books required for her courses. Danielson said she fell behind in her classes and eventually dropped out.

“These kids are on their own, they’re facing so many burdens and barriers to success in college already that we don’t want to create additional barriers for them,” she said. 

‘This appears to have been caught early’

Eric Zarnikow, director of the Illinois Student Assistance Commission, said there’s no indication that this kind of gaming of the financial aid system is common practice. He said students under guardianship status make up less than one percent of the state’s total Monetary Award Program (MAP) recipients. Within that subset of students, he said very few appear to be using the system to gain financial aid they wouldn’t otherwise receive. 

“We have not found any spike or unsettling trends in overall numbers for the last five years that would lead us to believe this is an exploding trend,” Zarnikow said. 

After staff at the U of I reported the issue to the U.S. Department of Education’s Office of the Inspector General, Zarnikow said that agency has made recommendations for changes to the federal student aid handbook for students that claim guardianship status. 

“I think the very good news here is this appears to have been caught early before it spread and got larger, not only in Illinois, but across the country,” Zarnikow said.

State Rep. Mary Flowers, a Chicago Democrat, disagreed with his characterization. 

“To say that it was a small, minute group… we don’t know that,” she said. 

Citing federal privacy laws, University of Illinois officials did not disclose to lawmakers how much state and federal financial aid money was misallocated to otherwise affluent students as a result of their guardianship status. U of I officials previously told Illinois Public Media that they had withdrawn institutional financial aid from at least four students involved in guardianship cases who attend or plan to attend the U of I. 

State Rep. Carol Ammons, an Urbana Democrat, expressed frustration with their reticence. 

“To me this committee can’t even more forward without us knowing how much state money has been inappropriately allocated,” she said.

Michelle Trame, financial aid director for the U of I, said she would consult with university legal counsel to determine what additional information may be released. U of I officials previously said they had implemented practices to protect against abuses of the financial aid system.

Officials from several state schools: Eastern Illinois University, Western Illinois University, Southern Illinois University, Northeastern Illinois University, Governor State University, Chicago State University, and Northern Illinois University; and Dominican University, a Catholic institution in suburban Chicago, all told lawmakers they had reviewed their guardianship cases and found no indication that families were misusing the system for their own financial benefit.

An official from Illinois State University said they were still reviewing their guardianship cases. 

‘It appears to continue to be a legal process’

Lawmakers repeatedly pressed state and university officials to weigh in on whether the practice is a crime or just unethical.

Trame said university officials had been advised that the practice appears to be legal.

When asked by Rep. Ford whether he believed the parents involved in these cases had committed a crime, Zarnikow said, “that would be a question for the Attorney General. We’re not law enforcement.”

State Rep. William Davis, a Democrat from Chicago’s south suburbs, asked Andy Borst, U of I’s director of undergraduate admissions, if the university could deny admission to a student who entered into guardianship for the sole purpose of qualifying for need-based aid.

“I feel like we were limited with a judge within the state saying, ‘yes, this is a legal transfer of guardianship,’ " Borst sead. "We have to abide by that transfer… it appears to continue to be a legal process."

Rep. Flowers, and other lawmakers, expressed frustration with those who did not describe the practice as fraudulent or illegal. 

“Had it been children from my community, or minority kids, I guarantee you all this niceness would not be going on,” Flowers said. 

‘A good place to start’

Rep. Ammons said lawmakers will hold additional hearings on the issue with Attorney General Kwame Raoul to determine whether the practice is a crime or a legal loophole.

U of I officials recommended lawmakers revisit guardianship statutes and make changes that would prevent affluent parents from transferring guardianship to game the system.

“This is really at the core of the issue and seems like a good place to start,” Trame said. 

She also requested that lawmakers look into giving university administrators more flexibility to deny federal and state aid to students. As it stands, she said, university officials cannot deny students federal or state aid — even if they learn that a student receives financial support from other sources. 

Borst suggested that lawmakers consider legislation to regulate the educational consulting industry in the state. Reporting from ProPublica Illinois tied several of the families involved in guardianship cases to a college consulting company based in Lincolnshire.

Borst said unscrupulous consultants can “lead to bad decisions like transferring guardianship.” 

He also recommended that the state invest more heavily in high school counselors.

“They are the heroes in this story,” Borst said. High school counselors initially tipped off U of I officials when they questioned why students from wealthy areas were receiving financial aid. 

A report from the National Association for College Admission Counseling and the American School Counselor Association indicates that there were more than 600 students for every high school counselor in Illinois in 2014. Borst said more high school counselors in the education system may prevent families from turning to consultants who lead them astray. 

Lastly, Borst urged lawmakers to resist the temptation to pass new laws that hurt students in guardianship cases with few resources and legitimate claims to financial aid.

Follow Lee Gaines on Twitter: @LeeVGaines