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College Financial-Aid Loophole: Wealthy Parents Transfer Guardianship of Their Teens to Get Aid
Amid an intense national furor over the fairness of college admissions, the Education Department is looking into a tactic that has been used in some suburbs here, in which wealthy parents transfer legal guardianship of their college-bound children to relatives or friends so the teens can claim financial aid, say people familiar with the matter.
The strategy caught the department's attention amid a spate of guardianship transfers here. It means that only the children's earnings were considered in their financial-aid applications, not the family income or savings. That has led to awards of scholarships and access to federal financial aid designed for the poor, these people said.
Several universities in Illinois say they are looking into the practice, which is legal. "Our financial-aid resources are limited and the practice of wealthy parents transferring the guardianship of their children to qualify for need-based financial aid—or so-called opportunity hoarding—takes away resources from middle- and low-income students," said Andrew Borst, director of undergraduate enrollment at the University of Illinois. "This is legal, but we question the ethics."
Also At:
https://www.propublica.org/article/university-of-illinois-financial-aid-fafsa-parents-guardianship-children-students
https://chicago.suntimes.com/2019/7/29/20746376/u-of-i-parents-giving-up-custody-kids-get-need-based-college-financial-aid-university-illinois
(Score: 0) by Anonymous Coward on Tuesday July 30 2019, @06:02PM (3 children)
The US has a population of (roughly, depending on how you feel about immigrants, blahblah) 350 million people.
The calculation of the poverty line is a little involved, but the marginal additional household burden per person can be ballparked at $5K/year, so we can take that as a point of departure. Just enough of a UBI to get you there (it would actually be more, because people living alone have higher expenses, but let's pretend ...) would put you at about $1.8 trillion. If you take annual per-person expenditure on personal goods and services, it's more like double that (or actually more).
This does not include health care as a rule (for a variety of reasons, including that most people in poverty in the USA qualify for a variety of systems at the state and federal levels that cover this need on a financial level) so we'd need to expand it for the healthcare function. Turns out the personal health care expenditure of the US is around $11K/person annually, but let's assume that by magic that halves because of wishful thinking when done federally (best of luck on that, guys!) so we add about another $1.8 trillion to the Free Stuff budget. Looking sharp at $3.6 trillion annually so far, let's check education ...
Right now primary and secondary education are already (mostly) rolled into the system, but you want it to cover tertiary education as well, so that's a cheapie at roughly another half a trillion nationally. Actually, it's more, but we'll assume that the magical savings fairy manages to escape the bureaucracy toad again, so ...
$4.1 trillion annually for free stuff.
Sorry, "Universal Basic" stuff.
OK, how do we do that?
We could raise taxes. Unfortunately, we can't raise taxes on the rich to raise that amount, because even if we lined them all up and machinegunned them from the geriatric with the golden walker to the infant with a golden pacifier, then confiscated every last penny, it wouldn't be enough. So we'd have to have much more broad-based taxes. You see, the annual household income across the whole population is less than $10 trillion, so you'd need to take and redistribute almost half of that to make this possible. Despite all the flapping about the evil 0.000001% hogging all the candy, the reality on the ground is that the median household income is in the neighbourhood of $50K/year, which means that a lot of the running tally of money in the country goes to very middle-class looking people. You'd need to tax them until the pips squeak, quite frankly. Good luck with that.
The other option would be just printing money. Now, I hate learning from history as much as anyone, but I have a feeling that Germany and Zimbabwe would both crack a beer and lean against a wall to watch while we did that. Wouldn't you?
Anyhow, I await your illustration of where the money comes from for Universal Basic Everything (do we also get Universal Basic Sex to satisfy the incel crowd? Inquiring minds want to know ...) and I'm sure lots of other people do too.
Don't disappoint us, now!
(Score: 0) by Anonymous Coward on Wednesday July 31 2019, @03:56AM
Socialist revolution and expropriation of the capitalist class.
(Score: 0) by Anonymous Coward on Wednesday July 31 2019, @05:10AM (1 child)
Did you know:
That UK, Canada, and Australia have better health outcomes than the USA while spending less than half as much? That most of your $11K per person per year is simply profit for the insurance companies?
That if you eliminated all of the paper-pushing involved in current welfare programs and simply equally distributed the money amongst all citizens, then the amount each would get would be similar to UBI proposals?
That an unconditional UBI and UHC (Universal Health Care) would be a safety net that lets people try new things and start new small businesses and that the result would be a massive economic boom?
(Score: 0) by Anonymous Coward on Wednesday July 31 2019, @03:59PM
Did know, yes. Also know that a lot of that is masked by variations in the system, and different statistical standards. (For example, a judge not-so-long-ago in Canada determined that private health care can be legal, but Canada so successfully annihilated its private health care system that it may as well not exist, but the UK does have a well-established private care system and Australia isn't identical either). This is why the post in question referred to plausible savings from federal mandates (and ignored the entrenched opposition any such diktats would get). The math on UHC/UBI/Free Stuff doesn't change because of your posting. Now read the original again, with attention to detail.