Monday, January 24, 2022
HomePolicyLawsuit Alleges Financial Aid Conspiracy at 16 Elite Schools

Lawsuit Alleges Financial Aid Conspiracy at 16 Elite Schools

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A federal lawsuit filed Monday has accused 16 elite colleges and universities of artificially inflating their prices for financial aid recipients.

The 61-page lawsuit filed by five former Vanderbilt, Northwestern, and Duke University undergraduates alleges that the schools have overcharged more than 170,000 students by hundreds of millions of dollars.

Schools taking the heat are Brown University, California Institute of Technology, University of Chicago, Columbia University, Cornell University, Dartmouth College, Duke University, Emory University, Georgetown University, Massachusetts Institute of Technology, Northwestern University, University of Notre Dame, University of Pennsylvania, Rice University, Vanderbilt University, and Yale University.

Two years after wealthy institutions faced flak for the Operation Varsity Blues scandal, the current lawsuit has once again put the spotlight on discriminatory admissions policies at top-ranked universities.

Allegations

The allegations revolve around a loophole in antitrust laws that allows each institution to limit the amount of financial aid provided to students. Colleges have used this loophole to their benefit by colluding in a price-fixing cartel to prevent competition among one another. 

The 16 schools collaborate through the 568 Presidents Group — an affiliation of colleges that admit students on a need-blind basis. Need-blind admissions schools do not consider an applicant’s financial situation when deciding on admission.

At least nine schools, including Columbia, MIT, and Northwestern, engaged in a secretive practice known as “enrollment management” to favor wealthy students over low- and middle-income applicants. 

While the other seven defendants may or may not have adhered to need-based admissions policies, the lawsuit claims they “knew or should have known that the other nine Defendants were not following need-blind admissions policies.”

The complaint also includes the testimonies of admissions officials who admitted to the culture of favoritism shown to wealthy students at these schools. 

Monday’s lawsuit comes on the heels of mounting pressure on the Biden administration to cancel the $1.6 trillion in student loan debt that has surpassed credit card and auto loans. While it’s not loan forgiveness, Biden has extended the payment pause on federal student loans until May 1.

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