Just months after the so-called "Varsity Blues" scandal, in which it was revealed that wealthy parents paid roughly $25 million to help their children gain admission to elite colleges and universities like Yale and Stanford, a new way wealthy families are manipulating the college admission process has come to light. A report by ProPublica highlights a practice by which Illinois parents exploit a legal loophole, ceding guardianship of their children during high school, often to a friend or family member. Their children then declare themselves financially independent, allowing them to qualify for need-based state, federal and university financial aid for which they would not otherwise be eligible. ProPublica identified nearly four dozen families in one Chicago-area county that filed this type of guardianship in the past 18 months, as well as petitions in several other nearby counties. Students qualified for federal Pell Grants and state Pell Grants, known in Illinois as the Monetary Award Program (MAP). Together, these grants are worth about $11,000 per year. Andy Borst, director of undergraduate admission at the University of Illinois at Urbana-Champaign says that rising college costs may be motivating bad actors. "I think that they're feeling the pressure of the costs of a college education and that pressure is leading to unethical decisions," he tells CNBC Make It. College costs have increased steadily over the past several decades, rising fastest at four-year public universities. According to the College Board's 2018 Trends in College Pricing Report, from 1988 to 2018, sticker prices doubled private nonprofit four-year schools but tripled for in-state students at four-year public universities. During the 2018-2019 school year, published in‐state tuition and fees at public four‐year schools averaged $10,230.

The University of Illinois identified 14 students (three who've completed freshman year and 11 who will enroll in the fall) who used this drastic method to secure need-based aid after high school counselors started wondering why wealthy students were getting invited to special programming for low-income students. "They started asking questions, and that tipped us off to look deeper into our information, because this isn't something that we would have necessarily thought to look for otherwise," says Borst. He stresses that while families may think they've identified a harmless hack, the practice has a direct impact on low-income students. "Financial aid resources are not unlimited," he says. "Whether we're talking about the federal government, the state government, or even institutional aid — there's only so much to go around." Because federal and state Pell Grants are distributed on a first-come first-served basis, many low-income students don't receive the funds they qualify for. According to ProPublica, last year about 82,000 qualifying Illinois students did not get their $5,000 MAP grant for this reason. "When a family who has the ability to pay, but maybe not the willingness to pay, goes down this route they are taking money away from low- and middle-income families," says Borst.

Lost faith in a broken system