School is one of 17 accused of colluding to limit financial aid and drive up tuition prices
By Melissa Korn of The WSJ. Excerpts:
"The University of Chicago has agreed to pay $13.5 million to settle a lawsuit in which it was accused of illegally colluding with other top universities to limit financial aid to students, making it the first defendant in the case to settle, according to a court filing Monday.
The lawsuit, filed in Illinois federal court in January 2022, accuses 17 colleges and universities, including most members of the Ivy League, Duke University, Vanderbilt University and the California Institute of Technology, of engaging in price fixing by using a shared methodology to calculate applicants’ financial need.
Under a decades-old federal antitrust exemption that expired in the fall, schools were allowed to collaborate on their aid formulas, but only if they didn’t consider applicants’ financial circumstances in their admission decisions. The suit alleged that these schools do weigh applicants’ ability to pay in certain circumstances, including by giving an edge to children of wealthy donors or when considering who to admit from wait lists. As a result, the suit says, the schools shouldn’t have been eligible for the antitrust exemption."
"The other 16 schools continue to deny the allegations in court. The schools moved to have the lawsuit dismissed last year. The University of Chicago agreed in the settlement to provide documents to the plaintiffs and detailed information about the school’s financial aid practices and those of other schools named as defendants."
See also MIT charged, along with other universities, in federal lawsuit for illegally limiting student financial aid awards: Defendant universities are alleged to have made admissions decisions without being fully need-blind by Kristina Chen of The Tech from January, 2022. Excerpt:
"The suit resembles a civil antitrust case in 1991 in which MIT and the eight Ivy League universities were charged with violating the Sherman Antitrust Act by working together to limit price competition on financial aid to prospective students.
In that case, the Ivy League schools signed a consent decree, agreeing to not collaborate on financial aid. MIT refused to sign the decree and instead participated in another federal trial. As a result of the trial, the U.S. Department of Justice dismissed the case against MIT and established new guidelines for non-profit universities to cooperate on need-based financial aid, which Section 568 was modeled after."
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Threat of anti-trust investigation leads colleges to compete more for students (2019)
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