Affluent Leeches Fail Ethics Exam

For more than a decade now, our family has been squirreling away money into a college fund as aggressively as we could. With three children to educate, we’ve never been under any illusions that we could actually pay the whole freight, even for relatively “affordable” state universities, but we wanted to do what we could to help our kids work their way toward their degrees.

Silly us. Thankful that we are blessed to be able to have the wherewithal to place a modest amount of savings aside, we’ve been dawdling in the old-fashioned spirit of self-reliance bequeathed to us by our parents. We’ve been saving with the expectation of actually spending the money to pay for college expenses.

According to the Internal Revenue Service and many universities around the country, other parents are playing us and other naive innocents for fools, and the admissions offices are letting them get away with it.

Sure, those parents are saving their money - large sums of it, in many cases - but they have no intention of parting with it for tuition, books, living expenses or other college-related incidentals.

As The Wall Street Journal related in an article last week, tens of thousands of parents all across the country are filing falsified student financial-aid forms, vastly understating their income so that their darlings can scarf up federal government grants and cheap loans. The higher the cost of the university, said one U.S. Department of Education investigator, the higher the incidence of fraud.

Escaping prosecution for fraud is easy enough because the Justice Department has its hands full with other cases that are much more costly to the federal treasury than a few thousand bucks per grant for dishonest parents.

Some of the cases reported by the Department of Education were outrageous. One student during the school year ending in 1996 received a federal Pell grant - intended only for low-income families - even though that student reported $1.3 million of income to the IRS. During an audit conducted by the IRS for the Education Department, more than 300 families underreported family income by more than $100,000. For the 1995-96 school year, the Journal reported, the audit revealed that more than $176 million in undeserved Pell grants were distributed to affluent applicants.

Yet many universities are hesitant to make a fuss over such malfeasance, in part because they make little effort to root it out by verifying applicants’ tax documents and in part because confronting people to ask if they are cheaters is so … well, uncomfortable. Paul Patelunas, former financial aid official at Catholic University and Johns Hopkins University, told the Journal: “Colleges don’t do anything because they’re afraid that they’re going to look bad to the public.”

Besides, he said, college financial-aid offices generally don’t believe that federal officials will act on reports of cheating, especially if a case involves only a few thousand dollars. In addition, there is tremendous competitive pressure to enroll talented students and enticements, even to the financially undeserving, is the name of the game.

Unfortunately, to paraphrase the late Sen. Everett Dirksen, a few thousand here and a few thousand there, and pretty soon you’re talking about real money - $176 million alone last year. Falsely obtained grants in aid diverted to well-to-do, undeserving leeches soak up the limited resources that otherwise could go to truly needy students.

One of the more disgusting revelations in the Journal article was a financial-aid consultant who bragged of assisting a client to obtain a $4,000 tuition grant for her daughter, even though the client “owned a $1 million apartment in New York City and a stock portfolio with a value in excess of $2 million.” The consultant had discovered handy loopholes that, like taxes, allowed “avoidance” rather than “evasion,” so it was all perfectly legal. The boast of the consultant marked him as a legal paragon and a moral reprobate.

Even so, there appears to be a universal attitude among the better-to-do that they are somehow entitled to exemption from the distasteful need to spend their own money. Like owners of professional sports franchises, they are perfectly delighted to let the “little people” subsidize their lucrative privileges.

Because enforcing the integrity of student financial aid appears to be so lax, the temptation to accelerate the pillaging of resources intended for the genuinely needy may become infectious if enough unscrupulous parents recognize how easily our economic betters are able to have their way with ill-gotten gains at some poor student’s expense.

Those who choose, out of a naive sense of responsibility and personal dignity, to save and spend their own money as far as it will go may be the object of chortles from their more pragmatic compatriots. Fine. When the patsies rise in the morning to gaze into the mirror, wondering how they will be able to scrape together that final semester’s tuition a few years down the road, they won’t be peering into the eyes of a parasite.