Rich Families Are Legally Separating from Their Kids to Pay Less for College

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: <a href="https:&#x2F;&#x2F;www.nytimes.com&#x2F;2019&#x2F;07&#x2F;30&#x2F;us&#x2F;extra-time-504-sat-act.html" rel="nofollow">https:&#x2F;&#x2F;www.nytimes.com&#x2F;2019&#x2F;07&#x2F;30&#x2F;us&#x2F;extra-time-504-sat-act...</a>

The issue here is that perfect price discrimination doesn&#x27;t actually seem fair to the vast majority of &quot;normal&quot; 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 &quot;scholarships&quot; that put them down to in-state tuition rates, but no lower. People do not generally pay the &quot;full&quot; price of these things[0].<p>[0] <a href="https:&#x2F;&#x2F;www.cnbc.com&#x2F;2019&#x2F;03&#x2F;18&#x2F;private-colleges-costs-35830-on-averagebut-students-may-pay-less.html" rel="nofollow">https:&#x2F;&#x2F;www.cnbc.com&#x2F;2019&#x2F;03&#x2F;18&#x2F;private-colleges-costs-35830...</a>

The sad thing is that kids who actually are cut off or estranged from their rich parents don&#x27;t have lawyers and consultants helping them to legally sever ties, and they end up having to drop out of school because they can&#x27;t get the forms needed to file the FAFSA or their parents make too much and won&#x27;t help them.

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.

To some extent, Universities are inviting this kind of gaming.<p>Stanford 2019-20 undergraduate tuition<p>Pay in full: &quot;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.&quot;<p>Four years is just under $280K.<p>Free: &quot;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.&quot;<p><a href="https:&#x2F;&#x2F;news.stanford.edu&#x2F;2018&#x2F;12&#x2F;04&#x2F;stanford-expands-financial-aid-middle-income-families-trustees-set-2019-20-tuition&#x2F;" rel="nofollow">https:&#x2F;&#x2F;news.stanford.edu&#x2F;2018&#x2F;12&#x2F;04&#x2F;stanford-expands-financ...</a>

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.

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.

Wow lol. Some people will use every trick in the book. FAFSA must be seeing a lot of &quot;orphans&quot; with famous last names out there.<p>The issue is that the system tries to force people to pay proportionally to their assets&#x2F;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.

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.

&#x27;Rich&#x27; is a relative term.<p>&gt; living in a $1.2 million home and earning more than $250,000 a year.<p>In other words, you make enough to not qualify for any aid, bit not enough to have $60k&#x2F;yr disposable income. I see where the parents are coming from.

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&#x2F;property.

As long as their former kids pay taxes on any resources given to them from their now non-relatives, and their parents don&#x27;t claim their non-children as dependents, and they get taxed on any inheritance from non-relatives.

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.<p>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?<p>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.<p>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.

Meanwhile, poorer unfortunate kids whose parents kick them out get caught in the gap where their parents won&#x27;t pay for college, but the college considers them dependents and won&#x27;t give them financial aid.<p>Source: Was one such kid. Took 2 years of paperwork and phone calls before I qualify for aid based on my own finances.

Not surprising when education is so ridiculously expensive, next only to healthcare. Who wouldn&#x27;t evade prices so high when possible? I&#x27;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.

It’s almost like this problem should be handled via progressive income&#x2F;wealth taxation that makes tuition free&#x2F;affordable to everyone. That way, the rich still pay more, just not in direct tuition.

Now that they know this may happen, what&#x27;s to stop every university closing the loophole?<p>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&#x27;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&#x27;t yet do this?

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&#x27;t scale up reduce cost? Also, what about majors like liberal arts? What are the students paying for?<p>The only other thing that comes to mind is faculty cost but are teachers that highly paid to warrant such high tuition?

My parents made me pay for school, but because they&#x27;re still my parents I have the &#x27;bad&#x27; (high percentage) student loans, and of course paid full tuition.<p>I think this is just a symptom of a broken system. And it&#x27;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&#x27; suggested it, though the other ended up being so offended it eventually lead to a real divorce.

&gt;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.<p>TWO. <i>TWO</i>. Even if we extrapolate that two out beyond our wildest dreams, it&#x27;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.

What are the downsides of this:<p>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&#x27;d be giving up, per school, and would weigh the perceived value of the schools against the percentages they take.

What if a kid is actually disowned by their rich parents, and isn&#x27;t getting anything from them? No aid for you?

Source should be changed to <a href="https:&#x2F;&#x2F;propublica.org&#x2F;article&#x2F;university-of-illinois-financial-aid-fafsa-parents-guardianship-children-students" rel="nofollow">https:&#x2F;&#x2F;propublica.org&#x2F;article&#x2F;university-of-illinois-financ...</a>

This makes no sense to me. You have $250k&#x2F;year income and you go to the trouble and risk possible unintended consequences of emancipating your child to save $20k&#x2F;year for 4 years? Totally bizarre.

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

The solution is simple: make student loans dischargeable in bankruptcy, just like every other kind of loan.<p>Otherwise there is no incentive for banks and colleges to not charge infinity for college.<p>The current system is like a legal modern form of slavery or mafioso.<p>It&#x27;s mind boggling how people don&#x27;t see this simple explanation.

This has been going on for a looong time.

This must be today&#x27;s daily &quot;here&#x27;s how rich people are ruining X&quot; article that has become so predictably regular on HN.

I&#x27;m supportive of this. Children should not be held accountable for &quot;the sins of their parents&quot;. My parents started charging me rent when I was 18 and told me I had to pay for college entirely by myself. I don&#x27;t see why their income should be held against me.