A PYMNTS Company

Prestigious Universities Accused of Price-Fixing in Financial Aid Scheme

By  |  December 18, 2024

A group of elite U.S. universities is facing intensified scrutiny over allegations of price-fixing in a case that could dramatically impact how higher education institutions handle admissions and financial aid. According to a filing submitted in federal court on Monday night, the universities’ practices may have overcharged students by $685 million, a figure that could rise to over $2 billion in damages under antitrust law if the plaintiffs prevail.

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    The lawsuit accuses Georgetown University, among others, of violating antitrust laws by manipulating admissions decisions in ways that favored wealthier applicants. Per The Washington Post, a central claim in the case involves Georgetown’s annual practice of compiling a list of about 80 prospective applicants, not based on their academic merit or extracurricular achievements, but instead influenced by family wealth and prior donations.

    The case stems from a 2022 lawsuit brought by students who argued that the schools breached their pledge not to consider applicants’ financial situations during the admissions process. The universities, including Georgetown, the University of Pennsylvania, and Cornell, argue that their financial aid practices were shielded under a now-expired 1994 federal law protecting need-blind admissions policies. However, the plaintiffs counter that the schools are not entitled to this immunity, asserting that evidence shows financial histories were considered in admissions decisions.

    Settlements and Remaining Defendants

    While ten universities, including Brown, Yale, and Columbia, have settled for a combined $284 million while denying any wrongdoing, Georgetown, Penn, and Cornell remain defendants. In a court filing Monday, the schools sought to challenge the $685 million damages estimate, calling it “fundamentally unreliable.”

    Penn also issued a statement labeling the lawsuit as “meritless,” arguing that the evidence disproves claims that the university favors applicants whose families have made or pledged financial contributions.

    However, Robert Gilbert, lead attorney for the plaintiffs, emphasized that his clients have uncovered “very substantial evidence” of a two-decade-long collusion among the universities that suppressed financial aid availability. Gilbert claims the coordinated actions resulted in significantly less financial aid being provided than would have been in a competitive market.

    A Complex Legal Landscape

    The universities have defended their financial aid collaboration as a lawful attempt to create common “principles” for need-based aid distribution. Critics, however, argue that these actions stifled competition, harming students and families who depended on transparent and equitable financial aid practices.

    Source: The Washington Post