Lawsuit Says 16 Elite Colleges Are Part of Price-Fixing Cartel

The federal lawsuit against Yale, M.I.T. and other colleges is the latest legal action to question admissions practices

By Stephanie Saul and Anemona Hartocollis of The NY Times. Excerpts:

"A lawsuit filed in federal court on Monday accused 16 of the nation’s leading private universities and colleges of conspiring to reduce the financial aid they award to admitted students through a price-fixing cartel."

[It] "takes aim at a decades-old antitrust exemption granted to these universities for financial aid decisions and claims that the colleges have overcharged an estimated 170,000 students who were eligible for financial aid over nearly two decades.

The universities accused of wrongdoing are Brown, the California Institute of Technology, the University of Chicago, Columbia, Cornell, Dartmouth, Duke, Emory, Georgetown, the Massachusetts Institute of Technology, Northwestern, Notre Dame, the University of Pennsylvania, Rice, Vanderbilt and Yale.

The allegations hinge on a methodology for calculating financial need. The 16 schools collaborate in an organization called the 568 Presidents Group that uses a consensus approach to evaluating a student’s ability to pay, according to the lawsuit.

Under federal antitrust law, these universities are permitted to collaborate on financial aid formulas if they do not consider a student’s ability to pay in the admissions process, a status called “need blind.” The group’s name is derived from a section of federal law permitting such collaborations: Section 568 of the Higher Education Act.

The suit claims that nine of the schools are not actually need blind because for many years, they have found ways to consider some applicants’ ability to pay.

The University of Pennsylvania and Vanderbilt, for example, have considered the financial needs of wait-listed applicants, the lawsuit says. Other schools, the lawsuit says, award “special treatment to the children of wealthy” donors, which, given the limited number of spots, hurts students needing financial aid.

The lawsuit claims that the actions of these nine schools — Columbia, Dartmouth, Duke, Georgetown, M.I.T., Northwestern, Notre Dame, the University of Pennsylvania and Vanderbilt — render the actions of all 16 universities unlawful, turning it into what the suit calls “the 568 Cartel.”

“Privileging the wealthy and disadvantaging the financially needy are inextricably linked,” the suit said. “They are two sides of the same coin.”"

Related post

Threat of anti-trust investigation leads colleges to compete more for students (2019)