The lawsuit, filed in federal court on Sunday, accuses 16 of the country’s leading private universities and colleges of conspiring to reduce the financial aid they provide to admitted students through a price fixing cartel.
The lawsuit, filed in federal court in Chicago on behalf of five former students who attended some of the universities named in the lawsuit, seeks antitrust exemptions granted to those universities for decades to make financial aid decisions and alleges that colleges overcharge prices. approximately 170,000 students who have been eligible for financial aid for almost two decades.
Universities accused of wrongdoing: Brown, Caltech, University of Chicago, Columbia, Cornell, Dartmouth, Duke, Emory, Georgetown, MIT, Northwestern, Notre Dame, University of Pennsylvania, Rice, Vanderbilt. and Yale.
The charges depend on the methodology for calculating financial requirements. According to the lawsuit, 16 schools are collaborating in an organization called the 568 Presidents Group, which uses a consensus approach to assess student solvency.
Under federal antitrust law, these universities are allowed to cooperate on financial aid formulas as long as they do not take into account the student’s ability to pay in the admissions process, referred to as “blind necessity”. The group’s name comes from a section of federal law allowing such collaboration: Section 568 of the Higher Education Act.
The lawsuit alleges that the nine schools don’t really need blind people because over the years they have found ways to account for some applicants’ ability to pay.
The suit alleges, for example, that the University of Pennsylvania and Vanderbilt University considered the financial needs of applicants on the waiting list. Other schools, the lawsuit says, provide “special treatment for children of the rich” donors, which, given the limited number of places, is detrimental to students in need of financial assistance.
The lawsuit alleges that the actions of these nine schools—Columbia, Dartmouth, Duke, Georgetown, MIT, Northwestern, Notre Dame, the University of Pennsylvania, and Vanderbilt—make the actions of all 16 universities illegal, turning it into what the lawsuit calls “Cartel 568”.
“Providing privileges to the rich and depriving the financially needy are inextricably linked,” the lawsuit says. “These are two sides of the same coin.
Peter McDonough, vice president and general counsel of the American Council on Education, an industry organization that includes 2,000 college and university presidents, including principals from 16 schools, said the case was similar to an antitrust lawsuit the Justice Department has filed. against Ivy League schools and MIT. in the 1990s.
Ultimately, he said, the Massachusetts Institute of Technology won a favorable decision from a federal appeals court, and the Justice Department settled its claims.
“I would be surprised to find that where that smoke goes up, fire burns today,” Mr. McDonough said, noting that the schools mentioned in the complaint are “very knowledgeable about antitrust and especially sophisticated. They were given good advice.”
Several institutions, including Columbia, Duke and Rice, declined to comment on the upcoming lawsuit. Karen Peart, a spokeswoman for Yale University, stated that “the university’s financial aid policy is 100% compliant with all applicable laws.”
No university is named in the financial aid lawsuit.
But the lawsuit said that Harvard, among other universities, refused to join the 568 group because it “would bring in financial aid packages that were smaller than what Harvard wanted to award.”