Education: Lost Loophole

With the cost of sending an offspring through college rising more than 70% since 1970, the Government has been willing to come to the rescue when family funds fall short. Now it seems that Uncle Sam has been reviewing his own budget.

The sore point is that middle-income parents may be exploiting a loophole in Health, Education and Welfare student-aid regulations to use money—totaling $3 billion this year—that might otherwise go to needier families. The trick: to plan ahead and not claim the college-bound child as an income tax exemption. The federal basic grants program considers any student not receiving more than...

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