A quick dive:
- The U.S. Justice Department challenged the legal arguments of top private colleges in a motion to dismiss a lawsuit in federal court alleging they engaged in price-fixing to lower financial aid packages for prospective students.
- Federal law allows colleges to work together on their financial aid formulas if they don’t consider applicants’ ability to pay in admissions. But earlier this year, former students sued 17 colleges, including Yale, Georgetown and Johns Hopkins, alleging that they coordinated their aid methodologies even though they are not institutions that did not understand the need. violation of antimonopoly law.
- In April, the colleges asked a judge to dismiss the case, arguing that they have blind admissions and comply with antitrust laws. The Ministry of Justice submitted an expression of interest with the court Thursday, ahead of a hearing on the motion to dismiss in August.
The lawsuit is against current and former members of the 568 Presidents Group, a collective of colleges formed in 1998 to collaborate on their financial aid systems. The group of former students who filed the lawsuit say the price-fixing scheme favors wealthy applicants and is increasing the price of college.
The Justice Department’s interest in the lawsuit adds more seriousness to the case, which could undermine one of the pillars of higher education admissions practices.
The agency echoed the suit’s arguments, saying colleges are eligible for exemptions from the 1994 antitrust law only if they have blind admissions. Institutions must also collaborate only with other non-need colleges on the aid methodology to qualify for the exemption.
The Justice Department waged a legal battle in the early 1990s against several colleges named in the suit for their involvement in a separate group that did only financial aid offers for some students. So far, the institutions have settled this lawsuit agreeing to no longer coordinate aid offers, a 1994 law later allowed needy colleges to cooperate on “general principles” to determine aid packages.
Group 568 is named after this exemption, Section 568 of the Improving American Schools Act. But its members may have violated that law — even if they didn’t know that other members didn’t really need the blind, the Justice Department suggested in a statement.
“The agreement between schools that admit all students on a blind basis and schools that do not fall outside the scope of Exemption 568,” the agency wrote. “To the extent that at least some of the defendants do not admit all students on a blind need basis, the 568 exemption will not apply here.”
The Department of Justice also aimed for colleges to coordinate financial aid offers based on need.
“If schools agree to a common method that results in an expected family contribution of $20,000 for a particular student, they can charge that student a net price of $20,000 without fear that the student will choose a competing school based on a more generous need. an offer of financial assistance,” the agency writes. “Thus, agreement on the methodology used to calculate need-based financial aid offers eliminates an important dimension of price competition.”