Columbia, peer institutions sued over 'price-fixing' financial aid, favoring wealthy applicants

Upper West Side NY

12 January, 2022

3:15 PM

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Columbia Daily Spectator BY IRIE SENTNER • JANUARY 10, 2022, 9:55 PM Columbia and 15 peer institutions were hit with an antitrust class action lawsuit late Sunday, alleging that the universities illegally work together to reduce the amount of aid they offer applicants. The suit also alleges that Columbia and at least eight other need-blind universities favor wealthy applicants in admissions decisions, with some institutions considering students' financial standings when deciding to admit them from the waitlist. The plaintiffs claim that Columbia, Yale University, Brown University, the University of Pennsylvania, and other elite institutions "have participated in a price-fixing cartel that is designed to reduce or eliminate financial aid as a locus of competition, and that in fact has artificially inflated the net price of attendance for students receiving financial aid." The University has declined to comment. This lawsuit is the latest example of legal action taken to curb discriminatory admissions practices in higher education. An organization called Students for Fair Admissions sued Harvard University in 2014 for racial discrimination against Asian applicants. Several of Columbia's peer institutions were later implicated in Operation Varsity Blues, a 2019 FBI investigation that exposed fraudulent admissions practices involving the bribery of admissions officials. With pandemic-induced changes to the admissions process causing applications to skyrocket and acceptance rates to plummet, experts fear that the pandemic and the ensuing recession have exacerbated the obstacles faced by underrepresented applicants to highly-selective institutions. [Read more: Over 60,000 students applied to Columbia this year. Will the 51 percent spike decrease the achievement gap?] The now-implicated universities are members of the "568 Presidents Group," a collection of need-blind institutions that share a common formula for calculating financial aid that legally dodge antitrust legislation by admitting students on a need-blind basis, as stipulated under Section 568 of the Improving America's Schools Act of 1994. However, the suit alleges that at least nine universities within this group are not, in fact, need-blind and that another seven universities have conspired with them to artificially inflate their cost of attendance. "Defendants have overcharged over 170,000 financial-aid recipients by at least hundreds of millions of dollars, in violation of Section 1 of the Sherman Act," the lawsuit said. The complaint argues that Columbia does not qualify for the 568 Exemption because admissions to the University's School of General Studies are not need-blind. Furthermore, students in the School of General Studies receive less financial aid despite generally being less wealthy and more socioeconomically diverse than students in Columbia's other undergraduate schools. The lawsuit claims that "the burden of supporting Columbia's preservation of prestige and financial accumulation therefore falls on those who can least afford it," as General Studies' student tuition contributes to the nine-figure Common Cost Tax the Faculty of Arts & Sciences pays to the central administration. This tax funds initiatives across a wealthier undergraduate student body. With the University's socioeconomic diversity stagnating as its tuition rate increases, the suit alleges that Columbia and its peer institutions maintain admissions systems that "favor the children of wealthy past or potential future donors." Moreover, at least some of these universities allegedly engage in econometric modeling to predict an applicant's likelihood of enrolling if offered admission. According to the plaintiffs, this practice allows universities to "forecast the revenue and cost implications of their admissions and financial-aid decisions." "Good luck getting any institution to tell you exactly how they handle ability to pay as a driver in their admit decision. … What they will say is 'We're need-blind.' That's bullshit. They would never tell you exactly how they do it, but they do it all the time," an anonymous enrollment manager said in the complaint. The plaintiffs are represented by Roche Freedman LLP, Gilbert Litigators, Berger Montague, and FeganScott. These firms have established a website that instructs students who attended any of the defendant institutions and received partial grant-based financial aid to contact their legal team. "We have conducted a multi-year investigation of these practices, which we allege are unlawful, and we plan to vindicate the rights of more than 170,000 financial aid students and their families whom we believe have been overcharged by these elite universities," Robert D. Gilbert, a partner at one of the aforementioned firms, said in a press release. Founded in 1877, the Columbia Daily Spectator is the independent undergraduate newspaper of Columbia University, serving thousands of readers in Morningside Heights, West Harlem, and beyond. Read more at columbiaspectator.com and donate here.