Students file 'price-fixing cartel' financial aid lawsuit against 16 prestigious universities

Over a dozen higher education institutions have been named in a lawsuit accusing the schools of participating in 'shared methodology' that neglected 'need-blind' standards.

The practice allegedly resulted in limiting financial aid to students and hiking tuition costs.

lawsuit on behalf of “five former students” is taking aim at more than a dozen elite colleges and universities, accusing the institutions of collaborating to violate antitrust laws, as well as unfairly limiting financial aid awards for students.

The Ivy League schools mentioned are Yale University, Brown University, Columbia University, Cornell University, Dartmouth College, and University of Pennsylvania. 

Other notable schools involved include Georgetown University, Northwestern University, the California Institute of Technology, the University of Chicago, Duke University, Emory University, the Massachusetts Institute of Technology, the University of Notre Dame, Rice University, and Vanderbilt University.

The lawsuit was filed in a federal court in Illinois against 16 institutions in total. 

“Lawyers say more than 170,000 former undergraduate students who received partial financial aid at those schools going back up to 18 years could be eligible to join the suit as plaintiffs,” the Wall Street Journal reported Monday. 

According to the plaintiffs’ argument, the universities colluded to compile financial aid awards, using the candidates’ ability to pay for their education as a deciding factor. Thus, the lawsuit argues that a standard of discriminatory policies disproportionally affected students with greater financial support needs as the institutions prioritized wealthier applicants. 

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This is a reportedly unlawful practice as universities are bound to apply a “need-blind” approach to eliminate discrimination in the admissions process. 

The text of the case defines the actions of the universities as them participating in a “price-fixing cartel that is designed to reduce or eliminate financial aid as a locus of competition,” and that these actions have “artificially inflated” the cost of tuition.

“These elite institutions occupy a place of privilege and importance in American society. And yet these same Defendants, by their own admission, 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,” the lawsuit reads

The lawsuit also establishes additional context regarding the boundaries of antitrust provisions. Section 568 of Improving America’s Schools Act of 1994 prevents collusion among competitors. This law extends to higher education institutions so long as “all students admitted are admitted on a need-blind basis.” 

However, the case cites nine universities that have, “favored wealthy applicants in the admissions process,” allegedly placing an emphasis on the financial capabilities of the applicants and discriminating against those in need of additional support.

“All Defendants, in turn, have conspired to reduce the amount of financial aid they provide to admitted students. This conspiracy, which has existed (with slightly varying membership) for many years, thus falls outside the exemption from the antitrust laws,” the lawsuit states.

Rice University has denounced the validity of the lawsuit, telling Campus Reform that they believe the case is “without merit.”

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”After reviewing this lawsuit, we believe it is without merit. Rice University is proud of its financial aid practices and we are prepared to vigorously defend them in court,” a university spokesperson stated.

The lawsuit comes as university admissions controversies continue to make waves. 

Recently, Harvard University announced that they would be extending a “test-optional” policy that would forgo ACT/SAT testing requirements during the application process through 2026. Rather, students are encouraged to “send whatever materials they believe would convey their accomplishments,” Campus Reform reported Jan. 3. 

Similarly, Stanford University took additional measures concerning test-optional policies for an additional year.

Legacy admissions, as well, are under construction for the role they play in admission decisions. Amherst College announced last fall they would be eliminating the program, claiming that the practice aligns with the notion that “‘having a connection’ is the best or the only way to get into elite colleges.”

Campus Reform has reached out to the other universities involved. Emory University and the University of Chicago declined to comment on the litigation. This article will be updated accordingly.

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