Graduation hat on dollar bills stock photo from Africa Studio/Shutterstock.

This article was posted as an April Fool's joke.

The education world was shaken recently when federal prosecutors charged 50 people with conspiring to cheat on college admissions tests or bribe athletic coaches to designate students as athletic recruits. Families paid $400,000, $950,000, and other amounts for what mastermind Rick Singer called a “side door” into elite colleges.

Now, a newly-unsealed bombshell court filing accuses many more affluent families, including many in our area, of exploiting other “side door” loopholes in order to guarantee their children the privilege of attending highly sought-after high schools.

The families would pay $750,000, $1 million, or even $2 million or more in order to secure the right to attend such schools as Winston Churchill High School in Montgomery County, Maryland; Woodrow Wilson High School in Washington, DC; or for even a chance, but no certainty, of attending Thomas Jefferson High School of Science and Technology in Fairfax County, Virginia, as well as many others where attendance gives students a significant leg up on admissions to competitive colleges.

Under the scheme, the wealthy parents would approach a person affiliated with a national organization, technically incorporated as a nonprofit, known by the initials NAR — which some have likened to Singer's so-called foundation KWF. The individual would then provide a list of other people in the communities in question who, for a payment often topping $1 million, would permit the family to modify their mailing address in such a way that guaranteed entry into the exclusive schools.

How the “keys-to-schools” system worked

The details of the mailing-address system are complex and relate to systems often critcized by advocates, where complex laws dictate a precise and convoluted geographic zone where this address-modification scheme is permissible.

The family would in most cases have to physically live in the location “sold” by the counterparty, who would use the money to flee the jurisdiction in some cases. A significant commission, often 5-6% of the payment, would go to the NAR agent(s).

These agents, also often known as Realtors, had become quite brazen in their promotion of the racket. Some advertised their power to provide this exclusive school access through mailers and online ads. To lure families into participating, they would sometimes use Photoshop or physical furniture to stage images of homes.

They would only minimally, or even not at all, conceal the fact that such payments would provide access to top schools for the children, many of whom were not aware of the large amounts of money their parents had paid on their behalf, just as many children in the college admissions scandal did not know about the bribes.

In many communities, this gimmick is so widespread that people interested in “selling” to a family that wanted to access the school would place a literal “for sale” sign in their yard, to find potential payees.

For sale sign stock photo from Andy Dean Photography/Shutterstock.

They would assure the families that they could “buy” a “house” in the exclusive school district and get in; in almost all cases, it worked.

The financial industry profited massively

Banks also profited from the system, lending money to families who could not otherwise afford the high price tag of a “door” to an elite high school. The banks would publicly offer, and even market, loans where the family could repay with a steep fraction of their annual income over a period of as much as 30 years. This demonstrates the massive advantage conveyed by “residency” in the school districts in question.

Capital One did not comment by press time and, thus far, continues to offer these loan products, though most marketing materials do not mention the schools, leaving it to families to connect the dots.

The families were able to exploit provisions in the United States tax code to ensure that their interest payments on such loans were even deductible from federal taxes, a loophole partially reduced, but not eliminated, in the 2018 tax bill. Such inaction demonstrates the insider influence that participants in the “keys-to-schools” scheme have with powerful federal policymakers.

Happy teenager in front of high school stock photo from mooremedia/Shutterstock.

Local governments are complicit

Often, local elected officials and school administrators were well aware of this racket. Many meetings allegedly took place where officials discussed the issue and acknowledged that it perpetuated massive inequities in the system, where families with lower incomes or lacking familial wealth are then unable to access this opportunity.

To entice families to spend and borrow such astronomical amounts, taking on what for most was record debt, Realtors and banks persuaded many families entangled in “keys-to-schools” that they could recoup their payment in the future by “selling” to another family. They argued that due to the limited supply of residency opportunities near top schools, the opportunity to command an even higher payment for school access in the future would increase.

As a consequence, participant families would then attend community meetings to argue, clandestinely on behalf of their own self-interest, against government proposals that might add more school district attendance opportunities at lower cost, such as multi-family apartments. They would argue that such proposals would “destroy the neighborhood,” “loom over their homes,” or that there “isn't enough parking.”

In this way, they would in effect bar to lower-income families access to the “side door” opportunity. In fact, resident efforts to preserve the keys-to-schools scheme even included campaigns to maintain a ban on “side door” dwellings, dubbed by reformers as “accessory apartments.” While these would given an equity holder an opportunity to earn back some of their over-the-table district-participation payment, it also would break down the ingrained exclusivity.

It remains to be seen whether, with the stunning disclosure of this entrenched overground economy, local officials in communities across the nation will move to reform it. Another, related system was also just revealed in which legislatures would pass laws ensuring that only people with address-assignments in exclusive areas are able to cast votes for the representatives which wield power over land use and school assignment policies in those same areas.