Businesshala News Exclusive | Yale, Georgetown, Other Top Schools Illegally Collude to Limit Student Financial Aid, Lawsuit Alleges

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A new federal lawsuit links continued efforts to change college admissions practices

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According to a lawsuit filed late Sunday in Illinois federal court, by law firms representing five alumni attending certain schools, pricing and misappropriation are using a shared method to calculate applicants’ financial need. Universities engaged in limited aid from. Under federal law schools are allowed to collaborate on their formulas, but only if they do not consider applicants’ financial need in admissions decisions. The suit alleges that these schools weigh candidates’ ability to pay under certain circumstances, and therefore should not be eligible for antitrust waivers.

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The lawsuit seeks damages and a permanent end to the schools’ cooperation in calculating financial need and providing assistance.

College admission practices are being challenged more widely and the pillars of the decades-old admissions system are falling apart.

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The Supreme Court is expected to decide as soon as this week whether to take up two cases focused on affirmative action, involving Harvard University and the University of North Carolina at Chapel Hill.

In October Amherst College said it would stop giving an edge to applicants whose parents attended the school, placing it among the first elite schools to eliminate legacy preferences. And partly because the pandemic made it difficult for students to take the ACT and SAT, thousands of colleges have shifted to a test-optional policy for recent and current applicants. Since then hundreds of those schools have extended this offer for at least a few more years.

In addition to Yale, Georgetown and Northwestern, the other named defendants in the lawsuit are: Brown University, California Institute of Technology, University of Chicago, Columbia University, Cornell University, Dartmouth College, Duke University, Emory University, Massachusetts Institute of Technology, University of Notre Dame, University of Pennsylvania, Rice University and Vanderbilt University.

Lawyers say more than 170,000 former graduate students who received partial financial aid at those schools up to age 18 may be eligible to join the suit as plaintiffs.

A Yale spokesperson said the school’s financial aid policy is “100% compliant with all applicable laws,” while a Cal Tech spokesperson said the school has confidence in its aid practices and a Brown spokesperson said the complaint was of merit. Was without

Representatives for Columbia, Cornell, Duke, Georgetown, Northwestern, Notre Dame, Penn, Rice and the University of Chicago declined to comment on the pending lawsuit, and MIT said it would respond in court in due course. Other schools did not immediately respond to requests for comment on the suit.

Colleges have been accused of anti-competitive behavior before: In 2019, an industry group representing college admissions officers agreed to allow more aggressive hiring practices after the Justice Department said it was anti-competitive behavior. But threatened to continue with the legal action.

In 1991, all eight members of the Ivy League and MIT were price fixing charge, Prosecutors said representatives of the schools would meet to discuss their anticipated aid offers for students who were admitted to more than one school. This practice unfairly limited price competition, prosecutors said. Schools said the approach ended bidding wars and allowed students to choose schools based on fit rather than price.

Eight Ivy League schools signed a consent decree and MIT agreed to a separate agreement to end that practice.

In 1994, Congress passed a law exempting antitrust violation schools that practice need-blind admissions, allowing them to create general guidelines for assessing an applicant’s financial need while putting together aid packages. Is. They still could not discuss assistance proposals for individual applicants. In response, 28 schools formed what is known as the 568 Presidents Group, named for the section of the law that allows collaboration on aid formulas. The group usually meets a few times a year to discuss its calculations.

The law benefited by allowing schools to bypass bidding wars for low-income applicants, but instead barred schools in favor of wealthier applicants to limit how much money they put into scholarships.

The new lawsuit alleges that members of that group are violating federal law because they are not completely blind. Rather, lawyers say that at least some schools consider financial need by giving children of wealthy donors an edge in admission. Some even weigh their finances when accepting applicants off the waiting list and look at finances in admissions decisions for certain programs, the suit alleges.

“While conspiring together on a method to provide financial aid that inflates net tuition prices, defendants also consider the assets of applicants and their families in making admissions decisions,” said Eric Rosen, in the suit. Included was an accomplice of Roche Friedman who was a chief prosecutor on the admissions-fraud investigation at the federal Varsity Blues College in 2019.

The lawsuit was filed in the Northern District of Illinois by Roche Friedman, Gilbert Litigators and Counselors, Berger Montague, and Feganscott.

Unless Congress renews it, the antitrust exemption is due to expire in September, but lawyers in the case say schools will still be responsible for charging students more than they did in prior years.

Write Melissa Korn at [email protected]

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