Topline
Yale and more than a dozen of the country’s top universities are facing a federal lawsuit over allegations they violated antitrust laws by sharing a formula to calculate financial need that limited aid offers while favoring admission for wealthy applicants.
Trees bloom on the campus of Yale University April 16, 2008 in New Haven, Connecticut.
Key Facts
The suit was filed late Sunday on behalf of five former students who attended three of the schools named in the proposed class-action lawsuit.
The universities allegedly took part in price fixing by using a shared methodology to determine students’ financial need, which the suit argues limited aid by preventing competition to offer more generous aid packages.
Under an antitrust exemption for schools, universities are permitted to work together on determining aid formulas as long as students are admitted on a need-blind basis, according to the filing.
However, the suit alleges that at least nine of the schools considered potential students’ ability to pay tuition in some admissions and waiting list decisions, which is prohibited for universities claiming the antitrust exemption.
The lawsuit seeks unspecified damages and for the universities to stop working together to determine financial need.
Upwards of 170,000 students who attended the schools using financial aid over the past 18 years could be eligible to join the lawsuit as plaintiffs, lawyers told the Wall Street Journal.
Tangent
Besides Yale, the other universities named in the suit are: Georgetown University, Northwestern University, Brown University, the California Institute of Technology, the University of Chicago, Columbia University, Cornell University, Dartmouth College, Duke University, Emory University, the Massachusetts Institute of Technology, the University of Notre Dame, the University of Pennsylvania, Rice University and Vanderbilt University.
Key Background
The universities being sued are all part of the 568 Presidents Group, an alliance of schools that maintain a common financial aid system. The group meets several times a year to discuss formulas, according to the Wall Street Journal. The group takes its name from Section 568 of the Improving America’s Schools Act (IASA) of 1994, which allowed universities to establish a shared financial aid method formula across different schools – an antitrust exemption – on the condition that financial need not play a role in admission. Law firms Roche Freedman, Gilbert Litigators & Counselors, Berger Montague and FeganScott filed the lawsuit in the Northern District of Illinois. Eric Rosen, a partner at Roche Freedman who is representing the plaintiffs, is a former federal prosecutor and helped convict parents involved in the Varsity Blues case, in which wealthy families were found to have committed fraud in order to get their children admitted into top universities. Actors Lori Laughlin and Felicity Huffman both served time in prison over the scandal.
Further Reading
Yale, Georgetown, Other Top Schools Illegally Collude to Limit Student Financial Aid, Lawsuit Alleges (Wall Street Journal)
Source: https://www.forbes.com/sites/carlieporterfield/2022/01/10/yale-and-other-top-us-universities-hit-with-lawsuit-for-allegedly-price-fixing-student-aid/