In lawsuit, Yale and other elite colleges are accused of limiting financial aid

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A lawsuit filed in federal court Monday accused 16 of the nation’s leading private universities and colleges of conspiring to reduce the financial aid they grant to admitted students through a price-fixing cartel.

The lawsuit, filed in federal court in Chicago on behalf of five former students who attended some of the universities named in the lawsuit, focuses on a decades-old antitrust exemption granted to these universities for financial aid decisions and alleges that the colleges are too many have charged an estimated 170,000 students who have been eligible for financial aid for nearly two decades.

Universities accused of misconduct include Brown, California Institute of Technology, University of Chicago, Columbia, Cornell, Dartmouth, Duke, Emory, Georgetown, Massachusetts Institute of Technology, Northwestern, Notre Dame, University of Pennsylvania, Rice, Vanderbilt and Yale.

The allegations depend on a method of calculating financial need. The 16 schools work together in an organization called the 568 Presidents Group, which, according to the lawsuit, uses a consensus approach to evaluate a student’s ability to pay.

Federal antitrust law allows these universities to collaborate on financial aid formulas if they don’t consider a student’s ability to pay in the admissions process, a status called “blind need.” The group’s name is derived from a part of the federal law that allows such collaborations: Section 568 of the Higher Education Act.

The lawsuit alleges that nine of the schools don’t actually need to be blind, having for many years found ways to account for some applicants’ ability to pay.

For example, the University of Pennsylvania and Vanderbilt considered the financial needs of candidates on the waiting list, the lawsuit said. Other schools, the lawsuit says, grant “special treatment to the children of wealthy” donors, which, given the limited number of places, hurts students in need of financial aid.

The lawsuit alleges that the actions of these nine schools — Columbia, Dartmouth, Duke, Georgetown, MIT, Northwestern, Notre Dame, the University of Pennsylvania, and Vanderbilt — make the actions of all 16 universities illegal, turning it into what the suit calls. the 568 cartel.”

Favoring the rich and penalizing the financially needy are inextricably linked,” the indictment said. “It’s two sides of the same coin.”

Peter McDonough, vice president and general counsel for the American Council on Education, an industry association whose 2,000 college and university presidents include the leaders of its 16 schools, said the case was similar to antitrust lawsuits filed by the Justice Department against Ivy League Schools and MIT in the 1990s.

Ultimately, he said, MIT obtained a favorable ruling from the federal appeals court and the Justice Department dismissed its claims.

“I would be surprised if I eventually found that there is fire where this smoke is being sent today,” said Mr McDonough, pointing out that the schools mentioned in the complaint were “highly antitrust conscious and very sophisticated. They are getting good advice.” .”

Several institutions, including Columbia, Duke and Rice, declined to comment on the pending lawsuit. Karen Peart, a Yale spokeswoman, said the university’s “financial aid policy is 100 percent in compliance with all applicable laws.”

Neither university is named in the financial aid lawsuit.

But the lawsuit said Harvard, among other universities, refused to join the 568 group because it “allegedly delivered financial aid packages smaller than what Harvard was willing to award.”

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