Georgetown among universities sued for being part of 'price-fixing cartel'

Georgetown University is among 16 top universities accused of being part of a "price-fixing cartel" that led to less financial aid for students in a new lawsuit.

The lawsuit, first reported by the Wall Street Journal, is based on these institutions' claim that they are "need-blind," meaning that their decision to accept applicants has nothing to do with whether they need financial aid. Since 1994, need-blind universities have received an exemption from antitrust laws, which allows them to collaborate in creating a methodology to determine an applicant's financial need.

But despite these claims, the lawsuit alleges, at least nine of these universities — including Georgetown — have favored wealthy applicants by, for example, granting special consideration to the children of rich donors. (The other seven institutions stand accused of colluding with them.)

The lawsuit reasons that, because these universities systemically favor the wealthy, they're not actually need-blind, and therefore ineligible for the exemption. As a result, there are more than 170,000 students and parents who have paid more than they should have to attend these universities over nearly two decades, per the lawsuit.

Georgetown declined to comment. The other defendants are Brown University, California Institute of Technology, University of Chicago, Columbia University, Cornell University, Dartmouth College, Duke University, Emory University, Massachusetts Institute of Technology, Northwestern University, Notre Dame, University of Pennsylvania, Rice University, Vanderbilt University, and Yale University. They're all members of a consortium called the 568 Presidents Group, which works together on a shared formula for determining how to award financial aid.

The lawsuit goes on to share how these universities all have billion-dollar endowments, and undergraduate student bodies that are disproportionately wealthy and privileged, when compared to the general U.S. population.

These universities are "gatekeepers to the American Dream," the lawsuit says, noting that this makes the alleged antitrust violations "particularly egregious because it has narrowed a critical pathway to upward mobility that admission to their institutions represents."

The lawsuit draws connections between these allegations and the so-called Varsity Blues scandal, in which prosecutors uncovered a conspiracy to bribe and otherwise entice college officials into accepting students who would not otherwise have been admitted to top universities. Georgetown expelled two students in connection with the scandal, and the university's former tennis coach was indicted.

The difference, however, is that the "systematic suppression of financial aid is the official policy" of the universities, the lawsuit states.

The lawsuit calls for an end to these universities sharing their financial aid methodology and for payment to the plaintiffs. It was filed in federal court in Illinois and seeks class-action status.

"Varsity Blues took on the side door of admissions," said Eric Rosen, a partner at Roche Freedman, one of the firms on the legal team, and the former prosecutor who led the Varsity Blues prosecution team. "This case takes on the back door — alleging that, while conspiring together on a method for awarding financial aid, which raises net tuition prices, defendants also favor wealthy applicants in making admissions decisions. The law does not allow them to do both."

This story is from DCist.com, the local news site of WAMU.