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Top U.S. universities are being sued for allegedly working together in a “price-fixing cartel” that overcharged thousands of students who were eligible for financial aid.
Thelawsuit, filed this week in a U.S. District Court in Illinois on behalf of five former students, claims 16 prestigious universities worked together to limit financial aid packages provided to students.
The complaint said the schools use a shared formula to calculate the financial need of applicants, which they are legally allowed to do under Section 568 of the Improving America’s Schools Act of 1994.
As part of the policy, the universities must not consider a student’s financial need in their application, in what is called a “need-blind” admissions system.
However, the lawsuit claims the schools did not follow need-blind policies and used their shared financial aid formula to participate “in a price-fixing cartel” designed to reduce or eliminate financial aid “as a locus of competition.” This “artificially inflated the net price of attendance for students receiving financial aid,” the suit alleges.
“This methodology assesses the income and assets of a given financial-aid applicant and their family to determine the applicant’s ability to pay and thus the financial contribution that the applicant and their family is expected to make,” lawyers representing the students, who did not immediately respond to PEOPLE’s request for comment, explained in the lawsuit. “The applicant’s assessed ability to pay therefore is a key determinant in the net price of attendance.”
Because of this, the plaintiffs argue that the universities do not fall under the antitrust exception.
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Nine schools — Columbia, Dartmouth, Duke, Georgetown, Massachusetts Institute of Technology, Northwestern, Notre Dame, University of Pennsylvania, and Vanderbilt — are accused of considering the financial circumstances of students and their families when deciding their acceptance.
The practice ultimately favored the “children of wealthy past or potential future donors,” and some of the nine schools also showed a preference for waitlisted students who did not need financial aid, attorneys claim.
Other universities named in the lawsuit are Brown, California Institute of Technology, University of Chicago, Cornell, Emory, Rice and Yale. Attorneys said these seven schools “may or may not have followed a need-blind admissions policy,” but “conspired with the other Defendants to reduce financial aid and increase the net price of attendance for their students.”
“In collectively adopting this methodology, and regularly meeting to implement it jointly, the [named universities have] explicitly aimed to reduce or eliminate price competition among its members,” the suit alleges.
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“As a result of this conspiracy, the net price of attendance for financial-aid recipients Defendants' schools has been artificially inflated,” lawyers said.
PEOPLE has contacted every school named in the suit; Notre Dame, Duke, Emory, University of Pennsylvania and Cornell have no comment.
“Caltech is currently reviewing the lawsuit and cannot comment on the specific allegations,” a spokesperson for the California Institute of Technology told PEOPLE. “We have confidence, however, in our financial aid practices.”
Yale said their financial aid policy “is 100% compliant with all applicable laws.”
The other universities have not yet responded.
The lawsuit comes nearly two years after thecollege admissions cheating scandal,which involved a number of parents offering bribes to get their children into prestigious schools across the country.
source: people.com
