A federal judge in Illinois has rejected a motion to dismiss a financial aid price-fixing lawsuit against 17 elite universities including Yale, Georgetown and Columbia.
U.S. District Judge Matthew F. Kennelly on Monday challenged the universities’ claim to be exempt from federal antitrust laws and rejected their claim to be exempt under a four-year statute of limitations.
In his ruling, the judge wrote that several former Duke, Northwestern and Vanderbilt students “cited specific evidence” in the lawsuit that the schools had violated their “need-blind” admission policies by quietly basing financial aid awards on students’ ability to pay tuition.
Need-blind schools promise not to factor a student’s ability to pay into their admissions decisions.
“The Court concludes that, regardless of which interpretation of ‘need-blind’ it adopts, the plaintiffs have plausibly alleged that the defendants do not admit all students on a need-blind basis,” Judge Kennelly wrote.
In the complaint filed Jan. 9, the former students say the schools have met in a consortium called the 568 Presidents Group since 1998 to fix “a uniform and lower level of aid” for need-based students.
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They claim the arrangement has overcharged more than 170,000 middle- and working-class families by hundreds of millions of dollars for tuition, room and board.
The complaint alleges that nine of the schools — Columbia, Dartmouth, Duke, Georgetown, the Massachusetts Institute of Technology, Northwestern, Notre Dame, the University of Pennsylvania and Vanderbilt — limited their aid offers as part of a broader strategy to prioritize wealthy applicants over need-based students in admission decisions.
UPenn and Vanderbilt “evidently withdrew” from the price-fixing agreement in 2020, when the complaint says their names disappeared from the 568 Presidents Group’s website.
The other seven universities — Brown, the California Institute of Technology, the University of Chicago, Cornell, Emory, Rice and Yale — “may or may not” have targeted wealthy applicants in violation of their need-blind policies, but the complaint claims they still agreed to the price-fixing.
On Feb. 15, an amended complaint added Johns Hopkins University, which joined the 568 Presidents Group last year.
The Biden Department of Justice has sided with the former students.
In a statement of interest filed July 7 in federal court, the Justice Department rejected the universities’ claim to receive an exemption from higher education antitrust laws.
The universities had cited a 1994 federal education law known as Section 568, which allows need-blind private schools to collaborate with their competitors.
Citing Supreme Court precedent, the DOJ statement argues that the universities’ use of a single “consensus methodology” to calculate need-based financial aid “eliminates an important dimension of price competition among schools.”
Most of the universities in the lawsuit have stated they cannot comment on pending litigation. Yale, Brown and Johns Hopkins have denied all wrongdoing.
“We maintain that Brown University’s financial aid is set without any specific knowledge or regard for how other colleges are setting their financial aid, and we will demonstrate this through the legal process,” university spokesperson Amanda McGregor said in an email to The Washington Times. “Although Brown is disappointed that it was not dismissed from the case, the university is confident that it will prevail in this matter.”
Yale spokesperson Karen N. Peart said the university “provides one of the most generous financial aid programs in the U.S.”
“Although the court will allow the case to proceed, Yale continues to believe the lawsuit is factually and legally baseless, and it will offer a vigorous defense,” Ms. Peart said in an email.
The class-action lawsuit seeks financial damages for an estimated 200,000 alumni who paid tuition or room and board at the schools from 2003 to the present, plus an injunction to end the price-fixing practice.