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Yale among top schools sued for allegedly colluding to limit student financial aid

The lawsuit argues the schools unfairly limited financial aid by using a shared methodology to calculate applicants’ financial needs.

NEW HAVEN, Conn. — Yale University is among 16 top U.S. universities named in an antitrust lawsuit accusing them of working together to unfairly limit student financial aid.

The lawsuit, filed Sunday in Illinois federal court, argues that the schools engaged in price-fixing and unfairly limited financial aid by using a shared methodology to calculate applicants’ financial needs. The Wall Street Journal was the first to report the lawsuit.

Under federal law, schools can collaborate on their financial aid formulas as long as they don’t consider applicants’ financial needs in admissions decisions. The lawsuit alleges the schools' collaboration violates that law.

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The schools are known collectively as “568 Presidents Group,” which was named after Section 568 of the law that allowed them to discuss the guidelines of financial aid. In 2003, the group established a shared methodology to determine a family’s ability to pay for college.

Schools were prohibited from favoring wealthier students so they could give away less financial aid.

The lawsuit – filed by law firms representing five former students who attended some of the schools – alleges nine of the schools do weigh candidates’ ability to pay in certain circumstances, and therefore shouldn’t be eligible for the antitrust exemption.

Yale is not listed as one of the nine schools accused of taking an applicant’s finances into account during admissions. Instead, the lawsuit names it as one of the seven schools that “may or may not have” considered applicants’ financial needs. It argues that those seven schools should have known the other nine were not abiding by need-blind admissions practices.

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The suit claims that by limiting financial aid, the schools have engaged in price-fixing, reducing competition and inflating the cost of attendance for students who receive financial aid. The lawyers claim to have calculated that the scheme affects more than 170,000 financial aid recipients.

"In critical respects, elite, private universities like Defendants are gatekeepers to the American Dream," the lawsuit states. "Defendants' misconduct is therefore particularly egregious because it has narrowed a critical pathway to upward mobility that admission to their institutions represents."

In addition to Yale, the other schools named as defendants in the suit are Brown University, the California Institute of Technology, the University of Chicago, Columbia University, Cornell University, Dartmouth College, Duke University, Emory University, Georgetown University, the Massachusetts Institute of Technology, Northwestern University, the University of Notre Dame, the University of Pennsylvania, Rice University and Vanderbilt University.

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A spokesperson at Yale University told FOX61 in a statement that the school’s financial aid policy is “100% compliant with all applicable laws.”

Representatives from Columbia, Cornell, Duke, Northwestern, Notre Dame, Penn, and Rice declined to comment to the WSJ on pending litigation. The other schools didn’t immediately respond to requests for comment on the suit.

The suit seeks damages and a permanent end to the collaboration in calculating financial needs and awarding aid.

The antitrust exemption is set to expire at the end of September unless Congress renews it.

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