In Lawsuit, Yale and Other Elite Colleges Are Accused of Limiting Financial Aid

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The national suit against Yale, M.I.T. and different colleges is the latest ineligible enactment to question admissions practices.

Duke University is 1  of 16 elite   schools named successful  a suit  accusing them of conspiring to trim  fiscal  assistance  awards done  a price-fixing cartel.
Credit...Travis Dove for The New York Times

Stephanie SaulAnemona Hartocollis

Jan. 10, 2022, 6:54 p.m. ET

A suit filed successful national tribunal connected Monday accused 16 of the nation’s starring backstage universities and colleges of conspiring to trim the fiscal assistance they grant to admitted students done a price-fixing cartel.

The lawsuit, filed successful national tribunal successful Chicago connected behalf of 5 erstwhile undergraduates who attended immoderate of the universities named successful the suit, takes purpose astatine a decades-old antitrust exemption granted to these universities for fiscal assistance decisions and claims that the colleges person overcharged an estimated 170,000 students who were eligible for fiscal assistance implicit astir 2 decades.

The universities accused of wrongdoing are Brown, the California Institute of Technology, the University of Chicago, Columbia, Cornell, Dartmouth, Duke, Emory, Georgetown, the Massachusetts Institute of Technology, Northwestern, Notre Dame, the University of Pennsylvania, Rice, Vanderbilt and Yale.

The allegations hinge connected a methodology for calculating fiscal need. The 16 schools collaborate successful an enactment called the 568 Presidents Group that uses a statement attack to evaluating a student’s quality to pay, according to the lawsuit.

Under national antitrust law, these universities are permitted to collaborate connected fiscal assistance formulas if they bash not see a student’s quality to wage successful the admissions process, a presumption called “need blind.” The group’s sanction is derived from a conception of national instrumentality permitting specified collaborations: Section 568 of the Higher Education Act.

The suit claims that 9 of the schools are not really request unsighted due to the fact that for galore years, they person recovered ways to see immoderate applicants’ quality to pay.

The University of Pennsylvania and Vanderbilt, for example, person considered the fiscal needs of wait-listed applicants, the suit says. Other schools, the suit says, grant “special attraction to the children of wealthy” donors, which, fixed the constricted fig of spots, hurts students needing fiscal aid.

The suit claims that the actions of these 9 schools — Columbia, Dartmouth, Duke, Georgetown, M.I.T., Northwestern, Notre Dame, the University of Pennsylvania and Vanderbilt — render the actions of each 16 universities unlawful, turning it into what the suit calls “the 568 Cartel.”

“Privileging the affluent and disadvantaging the financially needy are inextricably linked,” the suit said. “They are 2 sides of the aforesaid coin.”

Peter McDonough, vice president and wide counsel of the American Council connected Education, an manufacture enactment whose 2,000 assemblage and assemblage president members see leaders of the 16 schools, said the lawsuit was akin to antitrust litigation the Justice Department filed against Ivy League schools and M.I.T. successful the 1990s.

Ultimately, helium said, M.I.T. obtained a favorable national appeals tribunal ruling and the Justice Department settled its claims.

“I’d beryllium amazed to yet find that there’s occurrence wherever this fume is being sent up today,” Mr. McDonough said, noting that the schools named successful the ailment were “very antitrust alert and peculiarly sophisticated. They person bully proposal provided to them.”

Several institutions, including Columbia, Duke and Rice, declined to remark connected the pending litigation. Karen Peart, a spokeswoman for Yale, said the university’s “financial assistance argumentation is 100 percent compliant with each applicable laws.”

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Credit...Kevin Lamarque/Reuters

Neither assemblage is named successful the fiscal assistance lawsuit.

But the suit stated that Harvard, among different universities, declined to articulation the 568 radical due to the fact that it “would person yielded financial-aid packages that were smaller than what Harvard wanted to award.”

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