A ton of parents out in the Suburbs of Chicago have transferred custody of their college-age teens to friends and family. Over the past 18-months the tactic, which is apparently legal, lets the children declare themselves as financially independent. That way they show lower incomes on their financial aid forms.
These parents are wealthy! They are lawyers, doctors, and high-end realtors. One case in particular a students whose parents owned a $1.2 million house ended up showing earnings of only $4200 from a summer job.
The state's guardianship law allows a judge to approve custody transfers as long as all the parties agree that it is in the best interest of the child.
Now that the U.S. Department of Education is aware, they are looking further into the matter.