- Former students decide to defend their rights
- Exclusive universities are not for everyone?
- The lawsuit is against 16 universities
Former students decide to defend their rights
A group of former students has filed an antitrust lawsuit against 17 prestigious US institutions, accusing them of a conspiracy to restrict student financial aid and artificially inflate tuition fees, reports The Washington Post (WP).
According to the lawsuit, students overpaid educational institutions for around €685 million. Universities designed the scheme to call into question the transparency of their admissions policies and financial aid. If educational institutions are found guilty, the compensation amount could automatically triple to more than €2 billion under US antitrust law. USD 2 billion[1].
According to court documents, universities including Georgetown University, the Massachusetts Institute of Technology (MIT), the University of Pennsylvania and the University of Notre Dame allegedly gave preference to applicants from wealthy families despite claims that they had a "need-blind" policy (focusing on admitting students regardless of their financial situation).
Exclusive universities are not for everyone?
A group of prestigious universities called the "568 Presidents Group" was created at the end of the last century. These universities worked together to draw up rules for distributing financial aid to students. This cooperation was allowed by a 1994 law that provided an exemption from antitrust rules on the condition that universities accept students regardless of their financial situation.
However, lawyers for the former students argue that at least nine universities violated this rule. They allegedly still preferred wealthy students in breach of the exclusion clause. This antitrust exemption expired in autumn 2022.
"Our announcement today provides strong evidence that the defendants illegally colluded for 20 years in the calculation of financial aid, resulting in a substantially lower amount of student aid than would have been the case on the free market," said Robert Gilbert, one of the plaintiffs' lawyers.
The lawsuit describes cases where universities directly or indirectly considered applicants' financial situation and their families' history of victimhood when making admissions decisions. For example, the former president of Georgetown University used to compile a list of about 80 applicants each year, including information about their parent's financial situation and previous donations, but it did not take into account the applicant's academic performance, teacher recommendations, and personal achievements. According to the applicants, many of the applications were marked 'Please accept'.
The court documents also provide details: the former chairman of the MIT Corporation pressured the board of trustees to admit two wealthy applicants, and at the University of Pennsylvania, candidates from donor families were given a special status, increasing their chances of admission. In 2020, the last of these universities withdrew from the group to support students more generously, according to the lawsuit. The University of Notre Dame admitted that it sometimes considered victims' histories and families' financial means when admitting applicants.
The lawsuit is against 16 universities
The lawsuit was first filed in 2022 by eight former students and targets 16 universities, including Yale, Columbia, Duke, Brown, Emory, Georgetown, California Institute of Technology, Northwestern University, Cornell University, Dartmouth College, University of Pennsylvania, Vanderbilt University, MIT, Notre Dame, Rice and the University of Chicago. Johns Hopkins University was later added to the list. Since the lawsuit was filed, 10 institutions have already settled the case, paying a total of USD 284 million, but denying the allegations of violation of the law, saying they settled to avoid costly litigation. These funds will be distributed to the 200,000 students potentially affected by the illegal scheme.
Georgetown and Pennsylvania Universities, the California and Massachusetts Institutes of Technology, Cornell, Notre Dame, and Johns Hopkins continue contesting the lawsuit. They claim that the data and methodology used by the applicants are unreliable.
The background to the lawsuit has been a significant increase in university funding, with the total amount of university funding increasing from €55 billion in 2008 to €1 billion in 2010. The total amount of university funding has increased from 55 billion USD in 2003 to 220 billion USD in 2003. The plaintiffs' lawyers point out that the educational institutions could have allocated 10-20% more to student financial aid, but wished to limit the amount of aid.
Since the dissolution of the 568 Presidents Group in 2022, many universities have expanded their financial aid programs. Despite these efforts, the plaintiffs' counsel believes that the changes occurred only after the conspiracy ended and that the universities could have been much more generous throughout the 20 years.
Another plaintiffs' attorney, Ted Normand, believes that instead of competing for the amount of financial aid they could provide, universities "bailed themselves out and deprived their students of hundreds of millions of dollars in aid".
