News Summary
A federal judge has ruled that Cornell, Georgetown, and the University of Pennsylvania must face a class-action antitrust lawsuit. The suit alleges these universities conspired to suppress financial aid competition and favor wealthy students in admissions. It claims that despite their ‘need-blind’ policies, these institutions considered applicants’ wealth and donor history, leading to inflated tuition costs and reduced financial aid for many students. The ruling enables the case to proceed to trial, with potential damages estimated at about $2 billion if the universities are found liable.
Nationwide – A federal judge in Chicago has ruled that Cornell University, Georgetown University, and the University of Pennsylvania, along with two other elite institutions, must face an antitrust lawsuit. The lawsuit alleges that these universities conspired to suppress competition in financial aid and favored wealthy students in their admissions processes. This decision, issued on Monday by Judge Matthew F. Kennelly of the U.S. District Court for the Northern District of Illinois, denies the universities’ request to dismiss the case before trial.
The ruling clears the path for the class-action lawsuit, originally filed in January 2022, to proceed towards trial. The lawsuit, known as Henry, et al. v. Brown University, et al., claims that dozens of prestigious U.S. universities engaged in a “price-fixing cartel” that artificially inflated the cost of attendance for students receiving financial aid. Specifically, the plaintiffs allege that these institutions, while claiming to adhere to “need-blind” admissions policies, circumvented this commitment by considering applicants’ wealth and donation history.
Allegations of Collusion and Inflated Costs
The core of the lawsuit revolves around the universities’ alleged participation in the “568 Presidents Group,” an association that received an antitrust exemption. This exemption allowed member schools to collaborate on financial aid formulas, provided their admissions were strictly need-blind, meaning a student’s ability to pay was not a factor in admission decisions. However, the lawsuit contends that many of these schools did not consistently adhere to this need-blind requirement, effectively violating the exemption and engaging in anticompetitive behavior.
Students involved in the lawsuit claim they were overcharged by hundreds of millions of dollars due to reduced financial aid, which stemmed from the alleged collusion over a period of approximately two decades. The complaint suggests that this scheme slashed financial aid for around 200,000 students and overcharged them by an estimated $685 million. Lawyers for the students argue that this coordinated conduct increased the cost of tuition by approximately $6,200 when compared to top schools not participating in such agreements.
Universities Still Facing Trial
While a number of universities initially named in the lawsuit have reached settlements totaling nearly $320 million, Cornell, Georgetown, and the University of Pennsylvania are among five institutions that have chosen to continue fighting the claims. The other non-settling defendants include the Massachusetts Institute of Technology (MIT) and the University of Notre Dame. These universities have consistently denied any wrongdoing, asserting that their admissions processes are fair and that they are committed to supporting students from diverse socioeconomic backgrounds.
Previous settlements include Johns Hopkins University and the California Institute of Technology (Caltech), which agreed to pay a combined $35.2 million. Other institutions that settled earlier include Brown, Yale, and Columbia universities, contributing to a total of $284 million from ten schools. If found guilty, the remaining five universities could face approximately $2 billion in damages.
Background of the Lawsuit
The class-action lawsuit, filed in federal court in Chicago, alleges that 17 prestigious universities breached a pledge to admit students without considering their financial status. The plaintiffs argue that schools allegedly used wealth indicators like donation history to prioritize certain applicants, thus circumventing the need-blind admissions policy. Some allegations point to universities maintaining special admissions lists that favored applicants based on familial wealth. For instance, a former president of Georgetown University was accused of maintaining a list of approximately 80 students whose families were notable for their wealth or donations, with most of these students ultimately gaining admission.
The lawsuit also highlighted that some universities favored the children of alumni and donors, or weighed students’ finances to determine if they should be taken off a waiting list or admitted for specific programs. The group of colleges involved, the “568 Presidents Group,” disbanded in 2022 amidst the litigation, which means the schools no longer have an antitrust shield.
Implications for Higher Education
The ongoing legal battle has significant implications for financial aid practices at elite universities nationwide. The potential outcomes could set precedents for how institutions manage admissions and financial aid, particularly concerning need-blind policies and the transparency of their processes. The plaintiffs’ attorneys are focused on demonstrating liability for the remaining defendants and ensuring fair compensation for affected students.
The defendants have challenged the plaintiffs’ estimates of damages, dismissing them as unreliable and arguing that the financial models are flawed. Despite the settlements, all universities involved have denied any wrongdoing, reaffirming their commitment to socioeconomic inclusivity.
FAQ
What is the lawsuit about?
The lawsuit alleges that a group of elite U.S. universities, including Cornell, Georgetown, and the University of Pennsylvania, conspired to suppress competition in financial aid and favored wealthy students in their admissions processes.
Which universities are still facing the lawsuit?
Cornell University, Georgetown University, the University of Pennsylvania, the Massachusetts Institute of Technology (MIT), and the University of Notre Dame remain as defendants in the case.
What are the main allegations against these universities?
The lawsuit claims that these universities, while purportedly operating under “need-blind” admissions policies, circumvented this commitment by considering applicants’ wealth and donation history, leading to reduced financial aid and inflated costs of attendance.
When was the lawsuit originally filed?
The class-action lawsuit was originally filed in January 2022 in federal court in Chicago.
Have any universities settled?
Yes, several universities initially named in the lawsuit have reached settlements totaling nearly $320 million, including Johns Hopkins University and the California Institute of Technology (Caltech).
What are the potential damages if the remaining universities are found guilty?
If found guilty, the remaining five universities could face approximately $2 billion in damages.
What was the “568 Presidents Group”?
The “568 Presidents Group” was an association that received an antitrust exemption, allowing member schools to collaborate on financial aid formulas under the condition of strictly need-blind admissions. This group disbanded in 2022 amidst the litigation.
Key Features of the Financial Aid Antitrust Lawsuit
| Feature | Details | Scope |
|---|---|---|
| Nature of Lawsuit | Antitrust class-action lawsuit alleging collusion to suppress financial aid and favor wealthy students. | Nationwide |
| Initial Filing Date | January 2022 | Nationwide |
| Current Defendants | Cornell University, Georgetown University, University of Pennsylvania, Massachusetts Institute of Technology (MIT), University of Notre Dame | Nationwide |
| Total Settlements to Date | Nearly $320 million from various universities | Nationwide |
| Alleged Overcharged Students | Approximately 200,000 students | Nationwide |
| Alleged Total Overcharges | Estimated $685 million | Nationwide |
| Potential Damages for Remaining Defendants | Approximately $2 billion | Nationwide |
| Court Location | U.S. District Court for the Northern District of Illinois, Chicago | State-level (Illinois) |
| Central Allegation | Violation of “need-blind” admissions through wealth indicators and donor favoritism. | Nationwide |
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