In Lawsuit, Yale and Other Elite Colleges Are Accused of Limiting Financial Aid

A lawsuit filed in federal court on Monday accused 16 of the country’s leading private universities and colleges of conspiring to reduce the financial support they give admitted students through a price-fixing cartel.

The lawsuit, which was filed in Chicago federal court on behalf of five former students who attended some of the universities named in the lawsuit, targets a decade-long antitrust exemption granted to those universities for grant decisions, alleging that the colleges An estimated 170,000 students who have been eligible for financial assistance for nearly two decades have overcharged.

The universities accused of wrongdoing are Brown, the California Institute of Technology, the University of Chicago, Columbia, Cornell, Dartmouth, Duke, Emory, Georgetown, the Massachusetts Institute of Technology, Northwestern, Notre Dame, the University of Pennsylvania, Rice, Vanderbilt, and Yale.

The allegations depend on a method of calculating financial needs. The 16 schools work together in an organization called the 568 Presidents Group, which, according to the lawsuit, uses a consensus approach to assess a student’s ability to pay.

According to federal antitrust law, these universities are allowed to participate in funding formulas if they do not take into account the solvency of the students in the admission procedure, a status known as “blindness”. The name of the group is derived from a section of federal law that allows such cooperation: Section 568 of the Higher Education Act.

The lawsuit states that nine of the schools are not really blind because they have been finding ways to test some applicants’ solvency for many years.

The University of Pennsylvania and Vanderbilt, for example, have considered the financial needs of applicants on the waiting list, the lawsuit said. Other schools, the lawsuit said, “give special treatment” to the children of wealthy donors, which, given the limited number of places available, harms students in need of financial aid.

The lawsuit alleges that the actions of these nine schools – Columbia, Dartmouth, Duke, Georgetown, MIT, Northwestern, Notre Dame, the University of Pennsylvania, and Vanderbilt – make the actions of all 16 universities illegal and make what the lawsuit calls: the 568 cartel. “

“The privilege of the rich and the disadvantage of the financially needy are inextricably linked,” says the lawsuit. “They are two sides of the same coin.”

Peter McDonough, vice president and general counsel of the American Council on Education, an industry body whose 2,000 college and university presidents include the heads of the 16 schools, said the case was akin to an antitrust litigation by the Justice Department against Ivy League schools and MIT . I submitted in the 1990s.

Ultimately, MIT received a positive judgment from the Federal Court of Appeals and the Justice Department settled its claims.

“I would be surprised to find today that there is a fire where that smoke is being sent up,” said McDonough. The schools named in the complaint are “very aware of antitrust law and particularly demanding. You will be well advised. “

Several institutions, including Columbia, Duke and Rice, declined to comment on the pending litigation. Karen Peart, a spokeswoman for Yale, said the university’s “grant policies are 100 percent compliant with all applicable laws”.

Neither of the two universities is named in the state aid proceedings.

However, the lawsuit stated that Harvard, along with other universities, refused to join the 568 group because it “produced financial aid packages smaller than what Harvard was willing to give”.

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