The Biden Justice Department is siding with five former college students in a legal battle over a financial aid price-fixing conspiracy at 17 elite universities.
In a statement of interest filed last Thursday in federal court, the Department of Justice challenged 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.
Need-blind colleges are schools that promise not to factor a student’s ability to pay tuition costs into admissions decisions.
The lawsuit claims the 17 colleges quietly base their awards on the ability of students to pay, violating the need-blind requirement for the antitrust exemption.
“First, the 568 Exemption, like other antitrust exemptions, does not immunize agreements between entities that fulfill the exemption’s prerequisites and those that do not,” the statement reads in part. “Second, Defendants ’actual knowledge’ of their co-conspirators’ admissions policies is not relevant to whether the 568 exemption applies or whether their conduct violates the Sherman act.”
Citing U.S. Supreme Court precedent, the statement added that the universities’ use of a single “consensus methodology” to calculate need-based financial aid “eliminates an important dimension of price competition among schools.”
Five former Duke, Northwestern and Vanderbilt students filed the antitrust lawsuit Jan. 9 in Illinois, saying 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. 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 lawsuit says nine of the schools — Columbia, Dartmouth, Duke, Georgetown, Massachusetts Institute of Technology, Northwestern, Notre Dame, University of Pennsylvania and Vanderbilt — limited their financial aid as part of a broader strategy to prioritize wealthy applicants over need-based students in admission decisions.
Penn 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.
Another seven universities — Brown, California Institute of Technology, Chicago, Cornell, Emory, Rice and Yale — “may or may not” have targeted wealthy applicants in violation of their need-blind policies, but the complaint says they still agreed to the price-fixing.
On Feb. 15, an amended complaint added Johns Hopkins, which joined the 568 Presidents Group last year.
Most of the universities in the suit have stated they cannot comment on pending legislation. Yale and Brown have denied all wrongdoing.
The class-action suit 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.
• Sean Salai can be reached at ssalai@washingtontimes.com.
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