Exposing the Alleged Collusion: Ivy League Universities Accused of Inflating College Costs

A class-action lawsuit has been filed against 40 private universities, including several Ivy League institutions, accusing them of conspiring to overcharge students for tuition by considering the assets of noncustodial parents when making financial aid determinations. The lawsuit claims that this practice has resulted in students from divorced families receiving less financial aid than they would have in a fair market.

Uncovering the Alleged Price-Fixing Scheme in Higher Education

Lawsuit Alleges Coordinated Effort to Inflate Tuition Costs

The federal class action lawsuit, filed in the U.S. District Court for the Northern District of Illinois, alleges that the defendant universities, including every Ivy League institution except Princeton, have engaged in a "concerted action to require a noncustodial parent of any applicant seeking non-federal financial aid to provide financial information." This practice, according to the plaintiffs, has substantially raised the prices that the plaintiff class had to pay to attend college. The lawsuit claims that "absent this agreement, the University Defendants would have competed in offering financial aid in order to enroll their top candidates."

The Role of the College Board in the Alleged Scheme

The College Board, the organization that developed the CSS Profile methodology used by the universities to make financial aid decisions, has also been named as a defendant in the lawsuit. The plaintiffs allege that the College Board "made an intentional push to require schools to agree to the consideration of the income and assets of noncustodial parents when making financial aid determinations." This requirement, in addition to the federal financial aid form (FAFSA), has become a standard practice for about 250 private schools, including all the named defendant schools.

The Impact on Students from Divorced Families

According to the plaintiffs' brief, "students were told there were no exceptions to the requirement — even if a divorce court order was issued concerning college expenses." This means that students from divorced families were required to provide financial information from both their custodial and noncustodial parents, potentially reducing the amount of financial aid they received. The lawsuit claims that "the College Board, with prominent involvement from the University Defendants," developed this strategy as a "collective effort" to agree on the process for making financial aid determinations.

The Alleged Inflated Tuition Costs

As a result of the alleged price-fixing conspiracy, the plaintiffs contend that the average net price charged to students by the named universities "is approximately $6,200 more" than that of ten other top-50 schools that don't use the financial aid methodology in question. This significant difference in tuition costs suggests that the alleged scheme has had a substantial impact on the financial burden faced by students and their families.

The Legal Implications and Potential Consequences

The lawsuit was filed by the law firm Hagens Berman, which specializes in antitrust litigation. Steve Berman, the managing partner and cofounder of the firm, stated that "the financial burden of college cannot be overstated in today's world, and we believe our antitrust attorneys have uncovered a major influence on the rising cost of higher education." The lawsuit seeks to hold the defendant universities and the College Board accountable for their alleged actions, which have reportedly left "students from divorced homes" receiving less financial aid than they would have in a fair market.While the College Board has expressed confidence in prevailing in the action, and some of the named universities have denied the allegations, the lawsuit has the potential to shed light on the complex and often opaque financial aid practices in the higher education sector. The outcome of this case could have far-reaching implications for the affordability of college education and the transparency of the financial aid process.