Students overpaid elite colleges $685 million, ‘price-fixing’ suit says. (WaPo)

The system was rigged.  All price-fixing agreements are banned by our antitrust laws.  Let's enforce them. From The Washington Post:

Higher Education

Students overpaid elite colleges $685 million, ‘price-fixing’ suit says

A lawsuit claims a group of selective universities colluded in the past to reduce financial aid to students

Updated 

December 17, 2024 at 9:45 a.m. EST46 minutes ago

7 min

The Georgetown University campus in 2020. (Jonathan Newton/The Washington Post)

By Susan Svrluga

 and 

Danielle Douglas-Gabriel

A filing in an antitrust lawsuit against some of the nation’s top universities alleges the schools overcharged students by $685 million in a “price-fixing” scheme, raising serious questions about their past admission and financial aid policies.

Every year, according to a motion filed in federal court Monday night, Georgetown University’s then-president would draw up a list of about 80 applicants based on a tracking list that often included information about their parents’ wealth and past donations, but not the applicants’ transcripts, teacher recommendations or personal essays.

“Please Admit,” was often written at the top of the list, the lawsuit contends — and almost all of the applicants were.

Documents and testimony from officials at Georgetown, the University of Notre Dame, the University of Pennsylvania, MIT and other elite schools suggest they appeared to favor wealthy applicants despite their stated policy of accepting students without regard for their financial circumstances. That “need-blind” policy allowed the schools to collaborate on financial aid under federal law, but plaintiffs in the case say the colleges violated the statute by considering students’ family income.

Meanwhile, according to court documents, the schools’ endowments grew dramatically from 2003 to 2022, to a collective total of more than $220 billion.

Former students accuse 17 elite schools, including most of the Ivy League, of colluding to limit the financial aid packages of working- and middle-class students. The claimed damages of $685 million, which were detailed in the court filing Monday night, would automatically triple to more than $2 billion under U.S. antitrust laws.

The universities named in the suit have denied wrongdoing and sought to have the case dismissed. They say they have spent hundreds of millions of dollars on financial aid for students, and some have recently dramatically expanded their support for low-income and middle-class students.

A coalition of highly selective universities, formed in the late 1990s and known as the 568 Presidents Group, collaborated on aid formulas under a 1994 federal antitrust exemption. The exemption applied only if schools engaged in need-blind admissions. But attorneys for the former students say at least nine universities maintained admissions policies that still favored wealthy students in violation of the antitrust exemption, which expired in the fall of 2022.

Details that emerged in the case Monday included allegations that a former MIT Corporation chair allegedly applied pressure for the admission of two wealthy applicants; testimony from a former Harvard official who said the school had not joined the group because it would compel them to reduce their financial aid awards; and a Vanderbilt University official writing in 2014 that if the statute expired, the school could be forced into a bidding war for students.

The court document contends Notre Dame has admitted that it sometimes granted admission to applicants based on factors that included the donation history, or future capacity, of the applicant’s family.

And at Penn, the suit says, applicants given a special-interest designation —indicating they were from a wealthy or donor family — were more likely to get in. In 2020, Penn left the group to be more generous to students, according to the court filing.

The allegations stem from a class-action lawsuit brought in 2022 by eight former students who said the universities shared a methodology for calculating students’ financial need that reduced the amount of aid the schools provided to low- and middle-income students.

The lawsuit initially named 16 defendants: Yale University, Columbia University, Duke University, Brown University, Emory University, Georgetown, the California Institute of Technology, Northwestern University, Cornell University, Dartmouth College, Penn, Vanderbilt, MIT, Notre Dame, Rice University and the University of Chicago. Johns Hopkins University was later added.

The lawsuit says the methodology the group employed placed too much emphasis on an applicant’s ability to pay in calculating the net price — what students pay after taking grants, scholarships and tax credits into account. The schools that adopted the approach, the complaint argues, artificially inflated the net price of attendance for financial aid recipients for years.

he group dissolved after the lawsuit was filed.

Ten of the schools have settled, for a total of $284 million. Those schools have said that the case is without merit and they did nothing wrong, but that they wanted to avoid further expensive litigation. Many also noted they have spent hundreds of millions of dollars on financial aid for needy students.

The proceeds from the settlements will be pooled to provide cash payments to the entire class of 200,000 affected undergraduate students at the 17 schools, not just those who attended the universities that have settled.

Georgetown, Penn, Caltech, MIT, Cornell, Notre Dame and Johns Hopkins continue to fight the lawsuit.

The universities did not immediately respond to requests for comment Tuesday.

Many of the schools have long touted their generous financial aid policies. Penn and MIT, for instance, have offered free tuition based on household income since 2008 and recently increased the earnings threshold to cover more students. Caltech also provides grant aid to fully cover tuition, fees, housing and food for students with family incomes of less than $100,000 and institutional aid to fully cover tuition for students with family incomes of less than $200,000. The vast majority of American households would meet the free-tuition thresholds at those three schools.

Attorneys for the plaintiffs argue that many of these schools became more generous with their financial aid after the Presidents Group disbanded in late 2022. They argue that every school named in the case could have awarded 10 percent to 20 percent more institutional aid from unrestricted endowment funds throughout the 20 years but chose to limit aid packages.

“Our motion today spells out very substantial evidence supporting our claim that the Defendants colluded with each other for twenty years on financial aid, and the illegal collusion resulted in the Defendants providing far less aid to students than would have been provided in a free market,” Robert Gilbert, co-lead attorney for the plaintiffs, said in a written statement.

At Georgetown, the lawsuit contends, the annual “President’s List” of 80 or so applicants was based on a tracking list of more than 200 names that often included financial information about the parents. The process was explained by the school’s longtime dean of admission in a 2022 deposition given to the Justice Department, according to the court documents.

The filing cited a memo describing a “special interest policy” at Georgetown that would allow “certain well-qualified candidates to be provided favored treatment in admission in exchange for the opportunity the university will have to develop a better association with th[eir] family or sponsor.” The memo also noted the school is “under-funded and under-endowed and we need to do a better job of enlisting the support of America’s wealthiest families and corporations in assisting us. Special interest admits should provide this type of opportunity to enhance and strengthen our future.”

Ted Normand, co-lead attorney for the plaintiffs, said in a statement that rather than competing based on the aid they could afford to distribute, the schools “saved themselves, and cost their students, hundreds of millions of dollars in aid.”