Story at a glance
- Sixteen major universities across the U.S., including some Ivy League schools, are being sued over antitrust violations.
- A new lawsuit filed in Illinois argues that certain universities are engaging in price fixing and unfairly limiting student financial aid.
- Yale University, Georgetown University, Northwestern University, Columbia University and 12 other prestigious schools are named in the lawsuit.
A lawsuit filed Sunday against 16 major U.S. universities for antitrust violations argues that the schools colluded to determine how much financial aid would be awarded to students.
The lawsuit alleges that Yale University, Georgetown University and Northwestern University, along with 13 other prestigious schools, engaged in price fixing and unfairly limited student financial aid by using a shared methodology to calculate student applicants’ financial need, according to reporting by The Wall Street Journal.
The lawsuit was filed in the Northern District of Illinois and includes Eric Rosen, a partner at law firm Roche Freedman, who was the lead prosecutor on the federal Varsity Blues college admissions-cheating investigation from 2019.
Though schools are allowed to collaborate on their financial aid formulas under federal law, they can only do so if they don’t consider student applicants’ financial need when it comes to admissions decisions, with some schools given a special exemption from a 1994 law. The new lawsuit challenges this, arguing that certain universities are in fact taking into consideration student applicants’ ability to pay tuition in certain circumstances.
The universities named “have participated in a price-fixing cartel that is designed to reduce or eliminate financial aid as a locus of competition, and that in fact has artificially inflated the net price of attendance for students receiving financial aid,” according to the lawsuit.
According to an analysis by WSJ, that 1994 piece of legislation exempted schools considered need-blind, allowing them to create common guidelines for how to assess a student applicant’s financial need for aid packages. Schools still cannot discuss specific aid offers for individual students.
The law essentially allowed schools to bypass bidding wars for low-income student applicants, while not being allowed to favor wealthier student applicants that could potentially lower the amount of scholarship money given away.
The new lawsuit, however, argues that these groups of schools did in fact violate antitrust laws because some still consider financial need by favoring student applicants whose families are wealthy donors to the school. Some of the schools also consider a student applicant’s finances when deciding to take them off the waitlist and for admission into certain school programs.
“While conspiring together on a method for awarding financial aid, which raises net tuition prices, defendants also consider the wealth of applicants and their families in making admissions decisions,” said Rosen to WSJ.
The new lawsuit seeks damages and a permanent end to schools’ ability to collaborate in calculating financial need and awarding aid.
More than 170,000 former undergraduate students who received partial financial aid at the 16 universities mentioned in the lawsuit going back up to 18 years could be eligible to join the suit as plaintiffs. The lawsuit argues that these students were overcharged by “at least hundreds of millions of dollars.”
In response, a Yale University spokesperson told Yale Daily News, “Yale’s financial aid policy is 100% compliant with all applicable laws.”
This wouldn’t be the first time universities were accused of antitrust violations. In 1991, eight colleges and universities in the Ivy League agreed to end their policy of jointly agreeing to base all financial aid awards solely on need, without considering a student’s merit or trying to compete with other schools to get the best students by offering them more aid. They also agreed to avoid collaborating on tuition increases.
More recently in 2019, the Justice Department filed an antitrust case against the National Association for College Admission Counseling, alleging the organization established and enforced illegal restraints on the ways colleges recruit students.
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