16 top universities sued over allegations of conspiring to lower financial aid

A class-action lawsuit claims price-fixing occurred at institutions for nearly two decades, costing students millions.
By: | January 11, 2022
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Sixteen highly selective colleges and universities, including several Ivy League schools, are facing an antitrust class-action lawsuit that claims they conspired to lower financial aid to offset the cost of attendance for thousands of students.

The complaint, filed last weekend in federal court in Illinois by a group of national law firms representing students from five of the institutions, alleges that the 568 Cartel, or the 568 Presidents Group—the so-called membership group afforded certain protections under Section 568 of the Improving America’s School Act of 1994—price-fixed and artificially inflated the net cost for students who were entitled to aid. That resulted in what they say has been increased tuition burdens over the span of at least 18 years. The news was first broken by the Wall Street Journal on Monday.

The suit seeks to recover damages, which could be in the hundreds of millions of dollars, and change how elite institutions work together through the need-blind admissions process. “We plan to vindicate the rights of more than 170,000 financial aid students and their families whom we believe have been overcharged by these elite universities,” said attorney Robert D. Gilbert.

Section 568 effectively gives a group of colleges and universities the power to “determine a family’s ability to pay” through Consensus Methodology as long as they steer clear of financial need. However, plaintiffs argue that nine of the defendants (Columbia, Dartmouth, Duke, Georgetown, MIT, Northwestern, Notre Dame, Penn, and Vanderbilt) have not exercised a true need-blind policy for all students but instead have “favored wealthy applicants in the admissions process” and “made admissions decisions with regard to the financial circumstances of students and their families.”

The lawsuit goes a step further by claiming that the methodology and the overall net price set by institutions actually reduce price competition. If found to be true, that would violate Section I of the Sherman Act.

“Varsity Blues took on the side door of admissions. This case takes on the back door—alleging that, while conspiring together on a method for awarding financial aid, which raises net tuition prices, defendants also favor wealthy applicants in making admissions decisions,” said Eric Rosen, the former federal and state prosecutor who led the Varsity Blues prosecution team and who is now a partner at law firm Roche Freedman. “The law does not allow them to do both.”

The other defendants named in the lawsuit, in which plaintiffs are seeking a jury trial, include:

  • Brown University
  • California Institute of Technology
  • University of Chicago
  • Cornell University
  • Emory University
  • Rice University
  • Yale University

The lawsuit claims that these seven were part of the 568 Cartel and worked with the other nine at some point during the years in question, whether they engaged in need-blind admissions credibly or not.

At least one institution, Brown University, responded with a statement.

“Based on a preliminary review, the complaint against Brown has no merit and Brown is prepared to mount a strong effort to make this clear,” said Brian Clark, Associate Vice President for News and Editorial Development, for Brown University. “Brown is fully committed to making admission decisions for U.S. undergraduate applicants independent of the ability to pay tuition, and we meet the full demonstrated financial need of those students who matriculate. If we are served with the complaint, we will conduct a full review and respond as appropriate through the legal process.”

Plaintiffs and attorneys say in the filing that the process has been “particularly egregious because it has narrowed a critical pathway to upward mobility that admission to their institutions represents … [and] falls in particular on low- and middle-income families struggling to afford the cost of a university education and to achieve success for their children.”

The plaintiffs in the case include Duke student Sia Henry (2007-2011), Vanderbilt students Michael Maelander (2015-2019) and Brittany Weaver (2003-2007), and Northwestern students Brandon Piyevsky (2013-2017) and Kara Saffrin.

“We look forward to fighting for the rights of thousands of students and their families, who we allege have been improperly deprived of the fruits of competition in the provision of financial aid,” said Eric Cramer, one of the nation’s leading antitrust class action attorneys.