Republican Representative Pushed Through Financial Aid for College for the Rich

Let's say that you were allocating Federal dollars for a student loan program. Would one of your priorities be getting such aid into the hands of parents who run businesses employing less than 100 people? Parents who may have a net worth in the millions of dollars? Well, if you were Republican Representative Marilyn Musgrave of Colorado that's exactly what you would do.

This is from an article on the U.S. News & World Report website dated November 16, 2007:

A little-noticed loophole written into federal college financial aid rules allows the children of wealthy entrepreneurs to collect aid intended for the needy.

In a bill passed last year, Congress decreed that when determining how much each family can afford to contribute to a child's college education, the federal government should not consider the assets of owners of businesses with 100 full-time employees or fewer. Rep. Marilyn Musgrave of Colorado inserted this exemption, noting at the time that small-business owners should be treated the same as family farmers, who aren't expected to mortgage their property to pay for college. Musgrave, a Republican, did not respond to requests for comment. The federal government will still consider the income of all business owners.

According to the article, financial planners for the rich are already taking advantage of this provision, as this quote shows:

Matt Geherin, a financial consultant in Rochester, N.Y., helped a client move property worth $700,000 into a limited partnership to reduce taxes and improve his children's eligibility for need-based aid. The new exemption could "change our advice profoundly," he says.

Major advantage. Fred Amrein, a fee-only college funding adviser based in Wynnewood, Pa., says the new exemption allowed one client's child to qualify for a federally subsidized student loan this spring even though the parent's business was worth more than $1 million. Previously, the government would have estimated those parents could have paid more than $70,000 a year for tuition and thus would have awarded the child no need-based aid. "This is a major advantage for small-business families," Amrein says, adding, "I believe the size [of the exemption] is too large."

Marilyn Musgrave: She'll fight to the death to help the rich!