A lawsuit in federal court on Monday accused 16 of the nation’s leading private universities and colleges of conspiring to reduce the financial aid they give to students admitted through a price-fixing cartel.
The lawsuit, filed in federal court in Chicago on behalf of five former undergraduates who attended some of the universities named in the lawsuit, seeks a decades-old antitrust exemption granted to those universities for financial aid decisions and claims colleges overcharged about 170,000 students eligible for financial aid over nearly two decades.
Universities accused of wrongdoing are Brown, California Institute of Technology, University of Chicago, Columbia, Cornell, Dartmouth, Duke, Emory, Georgetown, Massachusetts Institute of Technology, Northwestern, Notre Dame, University of Pennsylvania , Rice, Vanderbilt and Yale.
The claims are based on a methodology for calculating financial needs. The 16 schools are working together in an organization called the 568 Presidents Group which uses a consensus approach to assess a student’s ability to pay, according to the lawsuit.
Under federal antitrust law, these universities are allowed to collaborate on financial aid formulas if they ignore a student’s ability to pay in the admissions process, a status known as “blind need.” . The name of the group is derived from an article of the federal law authorizing such collaborations: article 568 of the Law on Higher Education.
The lawsuit claims that nine of the schools are not actually blind because for many years they have found ways to account for the ability to pay of some applicants.
The University of Pennsylvania and Vanderbilt, for example, considered the financial needs of applicants on the waiting list, according to the lawsuit. Other schools, according to the lawsuit, give “special treatment to children of wealthy donors,” which, given the limited number of places, hurts students in need of financial aid.
The lawsuit claims the actions of these nine schools – Columbia, Dartmouth, Duke, Georgetown, MIT, Northwestern, Notre Dame, University of Pennsylvania and Vanderbilt – make the actions of the 16 universities illegal, turning them into what the prosecution calls “The Cartel 568.
“Putting the rich first and disadvantaging the needy are inextricably linked,” the lawsuit said. “These are two sides of the same coin.”
Peter McDonough, vice president and general counsel of the American Council on Education, an industry organization whose 2,000-member college and university presidents include leaders from all 16 schools, said the case was similar to a filed antitrust dispute. by the Department of Justice against Ivy League schools and MIT. in the 1990s.
In the end, he said, MIT got a favorable ruling from the federal appeals court and the Justice Department settled its claims.
“I would be surprised to eventually find out that there is a fire where this smoke is being sent today,” McDonough said, noting that the schools named in the complaint were “very aware of antitrust laws and particularly sophisticated” . They are well advised. “
Several institutions, including Columbia, Duke and Rice, declined to comment on the ongoing litigation. Karen Peart, spokesperson for Yale, said 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 Harvard, among other universities, had refused to join Group 568 because it “would have produced smaller grants than Harvard wanted to grant.”