MU officials investigating financial aid awards tied to guardianship switches

Officials at the University of Missouri are investigating how many financial awards the school gave out to students in a scheme that some consider exploits the system.

ProPublica Illinois highlighted the “legal loophole” used by some wealthy families in Illinois that allowed their children to qualify for financial need-based aid. Parents, according to the story, switch the legal guardianship of their children a year before high school graduation to another family member so that the child can claim financial independence from their parents. The student can then qualify for university, state or federal aid to attend school.

The story said some of those students received that aid from MU. School spokesman Christian Basi said the school was notified of the situation by another Midwest college that noticed the pattern. Basi said financial aid staff members at the school are now reviewing thousands of applications for financial aid for students who had a switch in legal guardianship for further investigation.

“If we find anyone that has indeed qualified, and I use that term loosely at this point, but qualified for these need-based financial aid packages, but yet their family situation would determine otherwise, we will be pulling that financial aid from them,” Basi said. “We will also be reporting their particular case to the federal government.”

Basi said the school can only control the financial aid it gives out. Programs like the Pell Grant system are maintained by the U.S. Department of Education. He said the school could legally do this if it felt a student falsely presented their economic situation.

Four out of five students at the university receive some sort of financial aid, according to the school’s website. Students filling out the Free Application for Federal Student Aid must provide some documentation about their family. The federal government then determines an expected family contribution to decide if that student qualifies for need-based aid.

Chris Harris, with the University of Illinois, told ABC 17 News that school officials there picked up on the practice in the summer of 2018. So far, the school has flagged 14 students who had legal guardianship transferred in order to receive the benefits. Harris said their review requires some level of discretion in highlighting students who did switch guardians.

“Some of the guardianship cases may be the court removing a student from a dangerous or otherwise unhealthy situation,” Harris said. “However, in other cases students continued to live with their parents who had incomes that far exceed the maximum qualification for need-based financial aid. We are able to differentiate these cases and are focused only on the guardianship cases that were undertaken exclusively to game the financial aid system.”

Basi said the university’s review will focus on students who reported a switch in guardianship. Financial aid staff will review how recently the switch was made and also look at publicly available court documents.