Education Law

Elite universities violated antitrust law in financial aid collaboration, lawsuit claims

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Nine elite universities sometimes consider applicants’ ability to pay tuition during the admissions process, which means that the schools should not be entitled to an antitrust exemption that allows them to collaborate on financial aid formulas, a federal lawsuit has alleged.

The antitrust lawsuit, filed Jan. 9, targets top schools that use a shared methodology to assess applicants’ financial needs when developing aid packages, report the Wall Street Journal, the Washington Post, the New York Times and NBC News.

An antitrust exemption, granted by a federal law known as Section 568, allows collaboration among schools that don’t consider financial status in admissions decisions.

“The law benefited schools by allowing them to bypass bidding wars for low-income applicants,” according to the Wall Street Journal. “But in exchange, the schools were barred from favoring wealthy applicants to minimize how much money they gave away in scholarships.”

But the suit said at least nine schools participate in the sharing arrangement, even though they do consider wealth in some circumstances. Some universities favor the children of past or potential donors, for example. Others consider an ability to pay for students on a waiting list or who are admitted to certain programs.

The suit said the nine schools are Columbia University, Dartmouth College, Duke University, Georgetown University, the Massachusetts Institute of Technology, Northwestern University, the University of Notre Dame, the University of Pennsylvania and Vanderbilt University.

Another seven universities named as defendants participated in the sharing arrangement with the nine schools, which means that they should not be entitled to the antitrust exemption, as well, the suit said. Their agreement restrains price competition relating to financial aid, which increases the net price of attending the universities, the suit said.

Because of the universities’ conduct, the suit said, more than 170,000 financial aid recipients have been overcharged hundreds of millions of dollars over the course of nearly two decades.

The suit, which seeks class action status, was filed by five former students at some of the schools by four law firms: Roche Freedman, Gilbert Litigators & Counselors, Berger Montague and FeganScott.

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