An ongoing class action alleged that in a higher education landscape without the 568 Presidents Group – a cohort of private universities that collaborate on financial aid calculations – the cost of attending 17 elite institutions would drop dramatically. Nine could offer free attendance to all current students receiving financial aid; eight, including Georgetown, could reduce their net cost of attendance by an average of $12,000 per year.
The charges were made public through nine former students who initially for follow-up 17 of those universities in January, accusing the group of 568 presidents of collusion, price-fixing and deliberately limiting student financial aid. In response, the 17 universities, including Georgetown, nearby Johns Hopkins University and six Ivy League schools, filed a Motion to dismiss in April by contesting these claims.
On August 15, this case was brought before Federal Judge Matthew Kennelly, who refuse the universities’ attempt to dismiss the lawsuit. According to Judge Kennelly’s decision, the class action consists of proceed to the discovery phase, during which the parties to the lawsuit obtain more evidence from each other, which could ultimately lead to a jury trial. Plaintiffs and defendants have agreed to establish a definitive timetable for the proceedings by mid-November this year. Tentatively, the final preliminary hearing is scheduled for May 2025.
Throughout the August hearings, former students accused the 17 universities of violate Section 568 of the American Schools Law Improvement Act of 1994, which describes the extent to which universities can collaborate in setting educational standards, and is where the 568 Presidents Group derives its namesake.
Under federal antitrust law, private parties are prohibited under the Sherman Antitrust Act of 1890 from collaborating to fix the market-wide price of goods and services. Section 568 of the U.S. Schools Improvement Act, however, creates an exemption from the Sherman Act by allowing schools to collaborate on the condition that they disregard students’ financial circumstances in making admissions decisions. .
Georgetown, along with eight other defendants in the lawsuit, publicly views itself as a need-blind school. Applicants allegehowever, that by adopting the sharing Consensus methodology in calculating aid, members of the 568 Presidents Group have in effect assessed students’ ability to pay as part of admissions processes in an attempt to eliminate price competition and artificially inflate their tuition fees. schooling. For these reasons, former students argue that the 17 universities are not truly need-blind and cannot be exempted under Section 568.
‘All 17 defendants consistently favored wealthy applicants in making admissions decisions,’ class action manager says website. “The defendants effectively increased the net price of attendance, harming in total more than 200,000 students from working and middle-class families.”
The 17 universities, on the other hand, disputed the students’ arguments, saying they were operating under antitrust exemptions. “[The] the plaintiffs do not plausibly allege a violation of the Sherman Act, have alleged injuries too speculative to satisfy antitrust requirements for harm and standing, and raise statute-barred claims,” the motion to dismiss states. universities.
Judge Kennelly was not the only person to reject the validity of the universities’ claims. The class action lawsuit has drawn national attention, including that of the US Department of Justice. In July, the Department of Justice submitted a Expression of interest in court, which challenged the universities’ dismissal arguments. “An agreement between schools that admit all students on the basis of need and schools that do not is beyond the scope of the 568 exemption,” the agency wrote.
If the plaintiffs prevail in this case, the outcome of this lawsuit could change the financial model of higher education in monumental ways, especially in the context of rising tuition fees. “This is the first time that antitrust law has been invoked to seek damages from elite American universities for collusion to limit student financial aid,” said Karie Stern, spokesperson for the student plaintiffs. , in an e-mail to Voice. “The 17 elite universities have been part of a nearly 20-year price-fixing cartel that has incentivized reductions in financial rewards for admitted students, systematically increasing net tuition paid by thousands of students and their families. .”
Former students claim that if each university chose to allocate an additional 2% of its unrestricted endowment funds to financial aid — a percentage that would still allow for robust endowment growth, the plaintiffs say — the cost of attendance would plummet and aid surplus could be distributed.
“Each financial aid student at Georgetown University could receive, on average, an additional $4,493 in scholarships per year for tuition, room, board, and fees if Georgetown were in competing to provide student financial aid rather than continuing to settle,” Stern wrote.