Top Major Schools Illegally Collude to Limit Student Financial Aid, Lawsuit Says

https://www.wsj.com/articles/yale-georgetown-other-top-schools-illegally-collude-to-limit-student-financial-aid-lawsuit-alleges-11641829659

by jmsflknr • 5 years ago

157 18 5 years ago

wsj.com

gringoDan• 5 years ago

https://archive.fo/rGFle

hypersoar• 5 years ago

It's very irritating when news articles talk about a complaint or opinion without linking to it.

https://storage.courtlistener.com/recap/gov.uscourts.ilnd.41...

Natsu• 5 years ago

Thank you for the link, that annoys me to no end, as well.

I mentally downgrade the reliability of any publication that does not do this, because legal reporting is so uniformly terrible that I hardly trust anyone to summarize things correctly.

jasonhansel• 5 years ago

From the text of the complaint:

The 568 Exemption allowed the [colleges in question] to eliminate incentives to compete if all of the members admitted all students on a need-blind basis. Plaintiffs show herein, however, that by their own actions, Defendants did not satisfy this provision and thus were not entitled to the exemption.

This seems to be the heart of the complaint. The admissions process wasn't actually need-blind, so the colleges don't have an exemption from laws against price-fixing.

Starting at page 26 (https://storage.courtlistener.com/recap/gov.uscourts.ilnd.41...) they list a number of ways that colleges, despite claiming to be need-blind, actually do take financial need into account in admissions decisions. That's the real reason this scheme is illegal.

One (small) part of the reason they aren't need-blind turns out to be that they decide where and how to recruit students using sophisticated models that try to predict the resulting demand for financial aid (see pp. 29-32). Essentially, they are able to use data to shape their applicant pool based on financial need, while still technically being "need-blind" when reviewing the applications that come in.

But there are other issues too, such as the use of need-aware policies for waitlisted applicants and the advantages given to "legacy" students.

JumpCrisscross• 5 years ago

Apparently the exemption expires this September [1].

[1] https://newrepublic.com/article/163001/congress-let-ivy-leag...

nopenopenopeno2• 5 years ago

The only solution I see is to eliminate “need” altogether.

mandmandam2• 5 years ago

Do you mean by eliminating poverty, or by giving free education for all?

Because I'd be happy with both.

loceng• 5 years ago

I wonder if participants in clinical trials are "gamed" this way as well to make sure they only get participants they may have learned would respond better to whatever they're trialing?

daniel-cussen• 5 years ago

Or were going to get better at the same time for reasons the medicine couldn't foil.

But it's a choice. There's always a way to tip the scales, they still have the choice of not doing so, or doing so against their own interests.

jazzkingrt• 5 years ago

Wow, there is a potentially a lot of money at stake here. It looks like I could be eligible to join this lawsuit if it goes forward.

eschulz• 5 years ago

This has happened before, with the Ivy League plus MIT university cartel being in real danger of complete destruction due to law suits. In those days the all the leaders in Congress and the US legal field got together to protect their elite alma maters. https://www.nytimes.com/1992/09/03/us/mit-ruled-guilty-in-an...

Today US universities can also count on assistance from the big banks for whom they generate tens of billions of dollars of government-backed loans on an annual basis. This antitrust scenario will continue to repeat itself, and I'm sure that former students of these universities will not be allowed into a legal position to get some of their money back or to harm them in any way.

jimbob45• 5 years ago

...[allege] the universities engaged in price fixing and unfairly limited aid by using a shared methodology to calculate applicants’ financial need.

This seems like the optimal way to run things though. In our current world where everything is "racist" and "sexist", how else can these entities shield themselves from lawsuit apart from sharing their methodologies? It seems like these entities were set up to fail from the beginning under these backwards rules.

lupire2• 5 years ago

One school could have tried to compete on price by using the same formula but then applied a discount to all students.

What's wacky is that we have allegations of "price fixing" based on claims that schools are unfairly charging far less than the fair market value of their product. These schools could easily double their prices and still make a profit... but they aren't trying to make a profit.

lupire2• 5 years ago

The crux of the claim is that the schools "overcharged" students by admitting students who could afford to pay more, instead of rejecting those students and admitting different, poorer students. So the only people actually harmed are students who did NOT attend these schools, and paid more at a different school. That's not who the plaintiffs are.

Essentially, wealthy students (who were admitted!) are claiming that they could have gotten better aid packages if the schools set prices based on something other than need, and competed for the value those students brought to the school. Since the schools allegedly endeavor to hit a target total revenue, while charging less in tuition than the cost of providing the education, the plaintiffs wanted poorer student to pay more so they could pay less.

Smells like entitled wealthy people.

okwubodu• 5 years ago

No, the claim is that the schools named colluded to fix financial aid to avoid bidding wars over students that need aid. This is legal so long as their admissions process is need-blind. However, the filing repeatedly mentions that the defendants allegedly give preference to "children of wealthy donors".

So it's save money by colluding on aid calculations or save money by picking wealthy applicants, and explicitly not both.

musicale• 5 years ago

The claim that they're doing so to "limit student financial aid" doesn't make sense: how are they going to raise tuition and fees to $100K/year without increasing student loans?

Top Major Schools Illegally Collude to Limit Student Financial Aid, Lawsuit Says

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