
Rich Families Are Legally Separating from Their Kids to Pay Less for College - HillaryBriss
https://www.vice.com/en_us/article/9kxe87/rich-families-are-legally-separating-from-their-kids-to-pay-less-for-college
======
neaden
In general a problem is that wealthier people have the time, energy, and
expertise to manipulate the system better than poorer people. Another place we
see it is in the usage of IEPs and other accommodations for learning
disabilities by wealthy families, in some areas more than 10% of students have
accommodations like this. See this article for more:
[https://www.nytimes.com/2019/07/30/us/extra-time-504-sat-
act...](https://www.nytimes.com/2019/07/30/us/extra-time-504-sat-act.html)

~~~
jcims
I doubt they have more time and energy, but they do have more resources to
engage advisors and experts to act on their behalf.

~~~
JustSomeNobody
> I doubt they have more time and energy

You'd be wrong. The poor are working two jobs. The poor are begging their boss
for a couple hours off to go stand in line to get their kids on medicaid. The
poor are walking to the bus stop. The poor are rushing to the apartment
manager to give them partial rent so they still have a roof over their head.

Time is something the poor have very little of.

Edit: I see some of you drive by disagree with me. I see this all the time as
foster parents. The poor are much more likely to be in a situation where their
children are removed and so talking with the bio parents, I hear their
struggles. But keep drive by disagreeing with me if that makes you feel
better.

~~~
dsfyu404ed
Those people don't need to engage in legal shenanigans to qualify for student
aid.

Also, you can do medicaid over the internet/phone/mail these days. Unless you
have a problem with the workflow that prevents you from using these systems
you should never have to speak to anyone in person. Or at least that's how it
is in my state.

Edit: Since I'm apparently so wrong does anyone want to tell me what kind of
legal shenanigans people who are poor enough to qualify for financial aid need
to go through other than filling out the forms truthfully?

------
wcunning
The issue here is that perfect price discrimination doesn't actually seem fair
to the vast majority of "normal" people. I was the youngest child of old
parents, so we looked fabulously wealthy to the FAFSA. In reality, my parents
were only mildly better prepared for retirement, which they were entering,
than the average local government employee (both of their careers). This meant
that my family paid full cost for flagship state university, despite much much
wealthier people paying less. Similarly, my out-of-state friends were given
"scholarships" that put them down to in-state tuition rates, but no lower.
People do not generally pay the "full" price of these things[0].

[0] [https://www.cnbc.com/2019/03/18/private-colleges-
costs-35830...](https://www.cnbc.com/2019/03/18/private-colleges-
costs-35830-on-averagebut-students-may-pay-less.html)

~~~
ryandrake
FAFSA is a terrible price discriminator, and unsurprisingly primarily screws
the middle class and kids with special circumstances. You have:

1\. Kids with legit wealthy parents from whom they are estranged and get no
support.

2\. Kids with moderately high income parents but also a lot of mandatory
expenses like medical bills, other kids to support, etc.

3\. Kids with middle class parents who are too poor to pay for College, but
too rich for financial aid [1] [2].

These are the people who either end up not going to college or graduating with
crippling debt. The poor who qualify for sufficient student aid end up fine,
and the rich, well, always end up fine.

1:
[https://www.forbes.com/sites/robertfarrington/2014/06/17/too...](https://www.forbes.com/sites/robertfarrington/2014/06/17/too-
poor-for-college-too-rich-for-financial-aid/#197891d96922)

2: [https://money.cnn.com/2016/04/28/pf/college/college-
financia...](https://money.cnn.com/2016/04/28/pf/college/college-financial-
aid/index.html)

~~~
alasdair_
My personal hatred is that if the parents divorce and both are extremely poor,
the kid can get financial aid, but then if one parent remarries someone with
money, all that aid can get pulled from future years.

The income of a step parent (who has never had a legal obligation to ever
provide support) should not be considered by FAFSA, at least not for the first
X years of marriage.

------
sct202
The sad thing is that kids who actually are cut off or estranged from their
rich parents don't have lawyers and consultants helping them to legally sever
ties, and they end up having to drop out of school because they can't get the
forms needed to file the FAFSA or their parents make too much and won't help
them.

~~~
codexon
They don't even have to be cut off or estranged.

I've known people who had rich 300k+ parents that were the "pull yourself up
by your bootstraps" kind of people who were able to pay for private college
with a high school job back in the day. They feel that they were teaching
their kid a valuable lesson.

They didn't get any help for college and were disqualified from all financial
aid.

~~~
weberc2
> disqualified from all financial aid.

What does this mean? The government wouldn't issue them a loan at all? Or that
they wouldn't subsidize the interest?

~~~
moate
Loans =/= financial aid, at least in the US.

IDK the specifics that OP was talking about, but my assumption is that instead
of being able to get need based assistance (due to being unable to demonstrate
"need" since their parents were so wealthy) these people would have been
forced to take out loans.

Depending on specific circumstances, this can mean anything from having to go
to a different school, to being strapped with tens of thousands of dollars of
additional debt, to being entirely unable to pay for school at all.

~~~
weberc2
I guess I didn't qualify for financial aid then. I had a small scholarship,
but I otherwise worked hard and lived frugally and earned my first degree with
only $7K in debt. My peers came out with $40-90K in debt, but they often
didn't work or only worked 8 hours/week (compared with my 20 hours/week) and
they would spend money lavishly (partying, luxury clothes, daily starbucks
lattes, 2-4 years in dorms, etc). I'm not sure if my experience was typical,
but making one's children pay for their own education is hardly a cruelty
(mind you, education in the US is still far too expensive).

~~~
moate
>>but making one's children pay for their own education is hardly a cruelty
(mind you, education in the US is still far too expensive)

Just to unpack a few things here (baring in mind I'm a true "eat the rich,
tear them from their ivory towers" type socialist).

1- College is WAY too damn expensive, and that's the majority of the
conversation. We do a terrible job teaching finance to children and then we
expect them to graduate high school and understand what they're undertaking
when they sign on for student loans.

2- "Cruelty" is about intent. Rich people can be cruel to other rich people by
inflicting financial difficulties on them. They can also be entirely
reasonable and attempting to teach them a lesson about hard work and "earning
your keep" and what not. It's entirely situational and too difficult to throw
a broad statement that covers every situation. This is more about philosophy
than anything objective.

~~~
weberc2
Fully agree on 1. 2 is a semantic debate; this thread already assumes the rich
parents had good intent.

------
cdmcmahon
This is the strongest argument that can be made for universal programs when it
comes to designing progressive public policy. Rich people have the time and
resources to aggresively take advantage of any system that tries to implement
means testing or scaled benefits. The winning play is to design programs where
benefits are given completely independently of time, money, access or power,
even if it means some people who do not need it will get some assistance.

~~~
aantix
As long as the system has rules, those rules can be optimized for.

As long as conditions exist, someone can study or hire expertise in helping to
meet those conditions.

~~~
cdmcmahon
The point of universal programs is that the "condition" for eligibility is
existence [1] and thus there is nothing to optimize for, by definition.

[1] This is obviously a simplification because of in reality the condition is
citizenship/residency, but that's a whole other issue.

------
testfoobar
To some extent, Universities are inviting this kind of gaming.

Stanford 2019-20 undergraduate tuition

Pay in full: "The total charges for full-tuition-paying families will be
$69,962, which includes $16,433 for room and board and $672 for a mandatory
health fee."

Four years is just under $280K.

Free: "Under Stanford’s program, parents with annual incomes below $125,000
and assets typical of that income level pay no tuition. Parents with an income
at or less than $65,000 and typical assets pay no tuition or room and board."

[https://news.stanford.edu/2018/12/04/stanford-expands-
financ...](https://news.stanford.edu/2018/12/04/stanford-expands-financial-
aid-middle-income-families-trustees-set-2019-20-tuition/)

~~~
non-entity
From what I've heard, California does well with schooling, especially for
lower income families. An internet acquaintance of mine mentioned something
about paying $46 a credit hour at a community college near him. Conversely,
the per credit hour cost of a community college near me is over 5x that!

~~~
wcunning
Several years ago, before it became _unaffordable,_ California residents were
entitled to education at any state school, including UC Berkeley, for free.
Community colleges were very definitely part of that. The better question is
what is the out of state or out of district cost of your friend's CC?

~~~
dhosek
In California, there is no out of district penalty for community college. Out
of state tuition is expensive, but I think on par with out of state tuition
for other states' community colleges.

------
NorthOf33rd
It’s easy to be enraged by reports like this, but I just see it as proof that
the system is too damned expensive. There’s opportunity cost here, along with
actual cost, and risk, and even then the savings is justifiable.

~~~
Aunche
Stanford has an endowment of $26.46 billion. Even with just a fraction of the
interest from that fund, universities like Stanford can easily pay everyone's
tuition. Instead, they'd rather hoard money, hire unnecessary admins, and
build new buildings with another billionaire's name on it.

------
rdtwo
I don’t see anything wrong with this. Colleges are priced for maximum wealth
extraction by charging people as much as they can possibly pay so smart
families are working the system to outplay them at their own game. This is
exactly the same as the medical system where prices are set based on ability
to pay and not service provided.

------
quaquaqua1
Wow lol. Some people will use every trick in the book. FAFSA must be seeing a
lot of "orphans" with famous last names out there.

The issue is that the system tries to force people to pay proportionally to
their assets/income. Pricing in this way is messy. What is worse is that
college already is inefficient at creating good employees-- rich people are
going through private channels to get their kids in good jobs these days
anyway.

------
viburnum
It’s insane that college finance has anything to do with parents. Probably a
mistake to even have expensive colleges, unless you’re deliberately trying to
reproduce inequality.

~~~
Kneecaps07
Because you're an adult legally. Well except when it comes to paying for
college. Then you're a child dependent on your parents.

~~~
asdff
You are a child dependent on your parents until you are 25 and have to pay for
your own health insurance.

------
uniformlyrandom
'Rich' is a relative term.

> living in a $1.2 million home and earning more than $250,000 a year.

In other words, you make enough to not qualify for any aid, bit not enough to
have $60k/yr disposable income. I see where the parents are coming from.

~~~
pier25
They could have not bought a 1.2M home...

~~~
quaquaqua1
That's not an option for people who live in parts of California, New York,
Seattle etc where median home prices are over 1M USD.

Surely you don't want to penalize those people who arr grossing a lot but
netting very little.

------
33MHz-i486
In other news ... instead charging a transparent and fair price for a service,
private colleges and government conspire to attain perfect price
discrimination against their education consumers based on itemization of their
income/property.

------
olliej
As long as their former kids pay taxes on any resources given to them from
their now non-relatives, and their parents don't claim their non-children as
dependents, and they get taxed on any inheritance from non-relatives.

~~~
walshemj
Yes is does seem silly to save a few thousands now when your going to get
stung for a lot more when your parents die.

Maybe some very good (but shady) lawyers are enrolling the parents in dodgy
schemes. A bit like how some "self employed" people in the UK got suckered
into tax avoidance schemes and are now facing tax bills of 500k plus

------
supersharklaser
I think it’s worth pointing out that universities only care so much as it’s a
PR matter and preserving the view of “fairness”. They don’t care in the sense
they are getting paid.

Overall, the increase in government funding and the effective use of
university as the expected next level of education, along with the very mixed
financial incentives schools have are the primary causes of the ballooning of
cost of education. Wouldn’t this just play more into this problem?

I’m in favor of more professional schooling, trade schools and
apprenticeships. There are very few reasons why everyone needs full liberal
arts degree—especially at the quality it is now.

Oddly, I think Europe is more effective in some regards. I don’t agree with
free educations—psychologically I think it devalues education. But there is a
lot more emphasis on trades, professional and other sorts of schooling,
overall a lot more variety in tracks of education. And while I don’t agree
with free education, I think the education system is much more aligned with
the public benefit.

~~~
zaccus
>I don’t agree with free educations—psychologically I think it devalues
education.

There are good reasons to be against free college, but this is not one of
them.

------
Arete314159
Meanwhile, poorer unfortunate kids whose parents kick them out get caught in
the gap where their parents won't pay for college, but the college considers
them dependents and won't give them financial aid.

Source: Was one such kid. Took 2 years of paperwork and phone calls before I
qualify for aid based on my own finances.

------
qwerty456127
Not surprising when education is so ridiculously expensive, next only to
healthcare. Who wouldn't evade prices so high when possible? I'm amazed about
how the US insist on regulating everything and fail to leverage free market in
these areas letting fair competition to drive the prices down.

------
seanmcdirmid
It’s almost like this problem should be handled via progressive income/wealth
taxation that makes tuition free/affordable to everyone. That way, the rich
still pay more, just not in direct tuition.

------
iguy
Now that they know this may happen, what's to stop every university closing
the loophole?

Since they appear to be free to do whatever they please, they can simply ask
for a list of anyone who was ever your parent, and a letter explaining any
omissions (like you were adopted age 1). They needn't even write the rules for
acceptance of excuses in advance, and can decide what to do about edge cases
(like someone adopted by his less-wealthy uncle at age 15...) when one
applies. Is there any reason they don't yet do this?

~~~
moate
How do you know that closes the loophole? How can you prove someone is saying
they're estranged and not actually estranged? Sad fact is a wide net for
social programs are typically better, even if it allows scammers to skim off
the system.

Which feels like the greater social loss to you, closing the loop hole and
finding that you're now harming people who need assistance or keeping it open
and allowing some people to benefit unfairly from the system?

~~~
iguy
It would close this particular loophole, by treating legally disowned and
merely estranged identically.

I'm not saying they would accept letters stating that you are estranged (which
they certainly don't do now). I'm saying they could refuse to believe recent
legal changes to parenthood, and just demand the whole list since birth. Just
as lots of documents need every name you've ever had, not just your current
legal name.

(Whether the actually estranged should be treated differently is another
question. Judging by how they've run the system so far, the colleges don't
seem inclined to do so. I don't mean to defend their behavior, only to ask
what moves they may make.)

------
0xcafecafe
I always genuinely wonder where does the high cost of college tuition come
from? Ok, if you doing some highly technical major (medicine or technology)
which involves you working with cutting edge equipment with maintenance cost
but does it really have to be that much? (~$50k pa). Doesn't scale up reduce
cost? Also, what about majors like liberal arts? What are the students paying
for?

The only other thing that comes to mind is faculty cost but are teachers that
highly paid to warrant such high tuition?

~~~
teddyh
Never look to the back-end costs to explain the price of anything. The price
is always set to what the market can barely tolerate. This is capitalism.

If you think that margins are too high, then this could indicate a lack of
competition. _That’s_ what you should look to for a possible explanation. Why
is there apparently a lack of competition between colleges?

~~~
tomatotomato37
Margins being high isn't just caused lack of competition, it can also be
caused by unwarranted prestige e.g. De Beers diamonds. You _could_ go to an
affordable community college with professors who attend because they enjoy
teaching, but then you wouldn't have a sexy expensive degree from
MIT/Berkely/Stanford college where the world's most esteemed professors send
their TA's to teach you so they can focus on more cutting-edge research.

~~~
perl4ever
I don't understand your implication that people choose between two year and
four year schools. Wouldn't people going to a two year school either be
looking for an associate's degree or to transfer to a four year school?

------
ApolloFortyNine
My parents made me pay for school, but because they're still my parents I have
the 'bad' (high percentage) student loans, and of course paid full tuition.

I think this is just a symptom of a broken system. And it's not only rich
families that do this, unless we consider all middle class couples rich now. I
personally know of a family where one of the spouses' suggested it, though the
other ended up being so offended it eventually lead to a real divorce.

------
jimbob45
>The Wall Street Journal was able to reach two parents who were coached by
Destination College into transferring guardianship of their kids before they
applied for financial aid.

TWO. _TWO_. Even if we extrapolate that two out beyond our wildest dreams,
it's still not symbolic of a pattern. Yes, this is a loophole and yes it
should be closed but there does not appear to be any evidence that is being
being abused widespread at the current time.

~~~
CodeCube
This isn't exactly rocket science ... my daughter just started college, and as
a tech industry employee let me tell you, she got no financial aid (some other
academic things aside).

When we started filling out the student loan paperwork, I had literally this
idea (the whole legal separation thing) as a passing thought. Of course,
because I'm not a monster, I laughed it off and kept on filling out the
paperwork ... but one doesn't have to be a great student out of Wharton to
figure out a scam like this, and you can bet your arse more people have
actually pulled the trigger on it.

~~~
rdtwo
When I was 18 I asked my parents to look into doing that. They laughed it off
but like you said it’s a pretty obvious loophole but you have plan ahead a bit
to utilize it

~~~
Throw_Away_4825
What exactly would that look like? The article talks about guardianship, but
with 18 they aren't your guardian anymore either way (at least in most
states). Or is it about not listing you as a dependent? Doesn't that have
negative tax implications for the parents?

~~~
rdtwo
I don’t think there are many deductions for kids that no longer need child
care, maybe 2k. But the biggest expense is medical insurance, that will eat a
lot of the savings

------
harshreality
What are the downsides of this:

Mandate that all (accredited, therefore regulated) schools charge a percentage
of future earnings, rather than tuition. The market between employers and
colleges will sort itself out. Every prospective student would know ahead of
time what percentage of future earnings (up to some cap) they'd be giving up,
per school, and would weigh the perceived value of the schools against the
percentages they take.

~~~
jb3689
There is some talk about something like this, and I believe Purdue was trying
it out already

~~~
iguy
I believe the Australian & UK systems work a bit like this, too. Perhaps it's
nominally a loan, but collected like income tax, with a threshold on how much
you must earn to pay at all.

However I don't think either is very flexible about different places charging
very different fees, or different implied interest rates.

------
kazinator
What if a kid is actually disowned by their rich parents, and isn't getting
anything from them? No aid for you?

~~~
zaccus
Assuming they're not legally separated and the kid is under 24, yes. Happens a
lot actually.

------
llacb47
Source should be changed to [https://propublica.org/article/university-of-
illinois-financ...](https://propublica.org/article/university-of-illinois-
financial-aid-fafsa-parents-guardianship-children-students)

------
hendersoon
This makes no sense to me. You have $250k/year income and you go to the
trouble and risk possible unintended consequences of emancipating your child
to save $20k/year for 4 years? Totally bizarre.

------
chkaloon
Same issue as wealthy elderly gifting all their assets to their kids ("pre-
inheritance") so they can get on Medicaid to pay for their nursing home care.

------
breck
The solution is simple: make student loans dischargeable in bankruptcy, just
like every other kind of loan.

Otherwise there is no incentive for banks and colleges to not charge infinity
for college.

The current system is like a legal modern form of slavery or mafioso.

It's mind boggling how people don't see this simple explanation.

~~~
harryh
This is a possible solution, but it's not simple.

If you do this, the current system of student loans we have will collapse
completely. Now, maybe that would be good...but it's not simple.

~~~
breck
It is simple.

Not easy, but simple.

This is _the_ solution. It works for all other industries. If I loan you money
to buy a house or buy a car, without doing due diligence to that loan, the
courts tell me "tough luck" if you file for bankruptcy. But if I lend you
$250,000 for an arts degree, the power of the state will force you to pay me.

That's insane!!!

~~~
harryh
Yes, and home and car loans still exist because if people don't pay it back
there is an asset to repossess.

That's not the case with college loans.

Which is why they are fundamentally different.

~~~
breck
> they are fundamentally different.

Perhaps it's good there are some things that are different. Some things are
property. Some are not.

In history there always seems to be a trend for those in power to try and
enslave those not in power, by putting property laws on people.

This student loan bankruptcy exception is one example. Intellectual slavery
laws like copyright and patents are another.

~~~
breck
In reply to tptacek:

"at the point where you make student loans dischargeable, you might as well
just concede that you're eliminating them altogether."

Have you ever gone through bankruptcy? Luckily I have not, but from what I've
read it's a horrible thing to go through with serious consequences to your
finances that takes a minimum of 7 years to overcome.

I think the cost of college would drop 10x. I went to Duke, and the gardens
and pools were lovely, really, but perhaps some tables and books would have
been the more appropriate use of my tuition money.

I do agree the IS bit was somehwhat a non sequitor, but there is a common
thread here I think when people try to put property and ownership rights on
things that nature doesn't make that easy.

~~~
tptacek
I have administered and underwritten bankruptcies for others and feel like I
have some direct personal experience with the process. I do not feel like the
consequences of bankruptcy are sufficient to make it irrational to discharge 6
figures of college debt through the process.

~~~
kasey_junk
I would have declared bankruptcy in a heartbeat for my wife’s loans & it would
have been rational. I a) make good money b) have good credit and c) don’t have
financial hardships.

------
nickbauman
This has been going on for a looong time.

------
daenz
This must be today's daily "here's how rich people are ruining X" article that
has become so predictably regular on HN.

~~~
devteambravo
So this is just typical media hype? Just wanna make sure I understand your pov

------
bcheung
I'm supportive of this. Children should not be held accountable for "the sins
of their parents". My parents started charging me rent when I was 18 and told
me I had to pay for college entirely by myself. I don't see why their income
should be held against me.

~~~
dmoy
From reading the article, I think the point is that these kids aren't actually
supporting themselves, they're just made to seem that way on paper.

~~~
martin8412
Surely their income from their parents is taxable at normal income tax level
then?

~~~
ohyeshedid
Only if they give/receive more than 11.1 million over the course of their
lifetime.

~~~
dmoy
And that, only the amount over $30k/yr for a couple gifting their child.

