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Top Major Schools Illegally Collude to Limit Student Financial Aid, Lawsuit Says

157 points by jmsflknr 5y ago

gringoDan 5y ago
https://archive.fo/rGFle https://archive.fo/rGFle
hypersoar 5y ago
It's very irritating when news articles talk about a complaint or opinion without linking to it. https://storage.courtlistener.com/recap/gov.uscourts.ilnd.411049/gov.uscourts.ilnd.411049.1.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.ilnd.41...
- Natsu 5y ago
  Thank you for the link, that annoys me to no end, as well. I mentally downgrade the reliability of any publication that does not do this, because legal reporting is so uniformly terrible that I hardly trust anyone to summarize things correctly.
jasonhansel 5y ago
From the text of the complaint: > The 568 Exemption allowed the [colleges in question] to eliminate incentives to compete if all of the members admitted all students on a need-blind basis. Plaintiffs show herein, however, that by their own actions, Defendants did not satisfy this provision and thus were not entitled to the exemption. This seems to be the heart of the complaint. The admissions process wasn't actually need-blind, so the colleges don't have an exemption from laws against price-fixing. Starting at page 26 (https://storage.courtlistener.com/recap/gov.uscourts.ilnd.411049/gov.uscourts.ilnd.411049.1.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.ilnd.41...) they list a number of ways that colleges, despite claiming to be need-blind, actually do take financial need into account in admissions decisions. That's the real reason this scheme is illegal. One (small) part of the reason they aren't need-blind turns out to be that they decide where and how to recruit students using sophisticated models that try to predict the resulting demand for financial aid (see pp. 29-32). Essentially, they are able to use data to shape their applicant pool based on financial need, while still technically being "need-blind" when reviewing the applications that come in. But there are other issues too, such as the use of need-aware policies for waitlisted applicants and the advantages given to "legacy" students.
- JumpCrisscross 5y ago
  Apparently the exemption expires this September [1]. [1] https://newrepublic.com/article/163001/congress-let-ivy-league-operate-monopoly https://newrepublic.com/article/163001/congress-let-ivy-leag...
- nopenopenopeno 5y ago
  The only solution I see is to eliminate “need” altogether.
  - mandmandam 5y ago
    Do you mean by eliminating poverty, or by giving free education for all? Because I'd be happy with both.
    - nopenopenopeno 5y ago
      Eliminating poverty is the only solution. Free college education will just create a demand for some other ridiculous scheme. I’d also be happy for both, but I think only one can work, but it would require retiring capitalism altogether as well.
      - mandmandam 5y ago
        Many countries have free college education. Some even pay people to go. It works, and it's expected, and rightfully so. If America wanted, we could copy the best aspects of other countries higher education models - the rest of the world would love to see Americans better educated, and would likely be more than happy to help. It's not ridiculous, it's not a scheme. It's basic common sense, and an investment. The rest of the developed world laughs at America for charging so much for college. They really do. It's a common punchline. It would be funny to me too, if I didn't have a distaste for schadenfreude. And hell yeah. Let's retire capitalism before we lose the oceans, insects, birds, steady climate and a life worth living.
- loceng 5y ago
jazzkingrt 5y ago
Wow, there is a potentially a lot of money at stake here. It looks like I could be eligible to join this lawsuit if it goes forward.
- eschulz 5y ago
  This has happened before, with the Ivy League plus MIT university cartel being in real danger of complete destruction due to law suits. In those days the all the leaders in Congress and the US legal field got together to protect their elite alma maters. https://www.nytimes.com/1992/09/03/us/mit-ruled-guilty-in-antitrust-case.html https://www.nytimes.com/1992/09/03/us/mit-ruled-guilty-in-an... Today US universities can also count on assistance from the big banks for whom they generate tens of billions of dollars of government-backed loans on an annual basis. This antitrust scenario will continue to repeat itself, and I'm sure that former students of these universities will not be allowed into a legal position to get some of their money back or to harm them in any way.
jimbob45 5y ago
>...[allege] the universities engaged in price fixing and unfairly limited aid by using a shared methodology to calculate applicants’ financial need. This seems like the optimal way to run things though. In our current world where everything is "racist" and "sexist", how else can these entities shield themselves from lawsuit apart from sharing their methodologies? It seems like these entities were set up to fail from the beginning under these backwards rules.
- lupire 5y ago
  One school could have tried to compete on price by using the same formula but then applied a discount to all students. What's wacky is that we have allegations of "price fixing" based on claims that schools are unfairly charging far less than the fair market value of their product. These schools could easily double their prices and still make a profit... but they aren't trying to make a profit.
lupire 5y ago
The crux of the claim is that the schools "overcharged" students by admitting students who could afford to pay more, instead of rejecting those students and admitting different, poorer students. So the only people actually harmed are students who did NOT attend these schools, and paid more at a different school. That's not who the plaintiffs are. Essentially, wealthy students (who were admitted!) are claiming that they could have gotten better aid packages if the schools set prices based on something other than need, and competed for the value those students brought to the school. Since the schools allegedly endeavor to hit a target total revenue, while charging less in tuition than the cost of providing the education, the plaintiffs wanted poorer student to pay more so they could pay less. Smells like entitled wealthy people.
- okwubodu 5y ago
  No, the claim is that the schools named colluded to fix financial aid to avoid bidding wars over students that need aid. This is legal so long as their admissions process is need-blind. However, the filing repeatedly mentions that the defendants allegedly give preference to "children of wealthy donors". So it's save money by colluding on aid calculations or save money by picking wealthy applicants, and explicitly not both.
musicale 5y ago
The claim that they're doing so to "limit student financial aid" doesn't make sense: how are they going to raise tuition and fees to $100K/year without increasing student loans?

157 points by jmsflknr 5y ago

https://archive.fo/rGFle https://archive.fo/rGFle

It's very irritating when news articles talk about a complaint or opinion without linking to it. https://storage.courtlistener.com/recap/gov.uscourts.ilnd.411049/gov.uscourts.ilnd.411049.1.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.ilnd.41...

Natsu 5y ago
Thank you for the link, that annoys me to no end, as well. I mentally downgrade the reliability of any publication that does not do this, because legal reporting is so uniformly terrible that I hardly trust anyone to summarize things correctly.

jasonhansel 5y ago

From the text of the complaint: > The 568 Exemption allowed the [colleges in question] to eliminate incentives to compete if all of the members admitted all students on a need-blind basis. Plaintiffs show herein, however, that by their own actions, Defendants did not satisfy this provision and thus were not entitled to the exemption. This seems to be the heart of the complaint. The admissions process wasn't actually need-blind, so the colleges don't have an exemption from laws against price-fixing. Starting at page 26 (https://storage.courtlistener.com/recap/gov.uscourts.ilnd.411049/gov.uscourts.ilnd.411049.1.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.ilnd.41...) they list a number of ways that colleges, despite claiming to be need-blind, actually do take financial need into account in admissions decisions. That's the real reason this scheme is illegal. One (small) part of the reason they aren't need-blind turns out to be that they decide where and how to recruit students using sophisticated models that try to predict the resulting demand for financial aid (see pp. 29-32). Essentially, they are able to use data to shape their applicant pool based on financial need, while still technically being "need-blind" when reviewing the applications that come in. But there are other issues too, such as the use of need-aware policies for waitlisted applicants and the advantages given to "legacy" students.

JumpCrisscross 5y ago
Apparently the exemption expires this September [1]. [1] https://newrepublic.com/article/163001/congress-let-ivy-league-operate-monopoly https://newrepublic.com/article/163001/congress-let-ivy-leag...
nopenopenopeno 5y ago
The only solution I see is to eliminate “need” altogether.
- mandmandam 5y ago
  Do you mean by eliminating poverty, or by giving free education for all? Because I'd be happy with both.
  - nopenopenopeno 5y ago
    Eliminating poverty is the only solution. Free college education will just create a demand for some other ridiculous scheme. I’d also be happy for both, but I think only one can work, but it would require retiring capitalism altogether as well.
    - mandmandam 5y ago
      Many countries have free college education. Some even pay people to go. It works, and it's expected, and rightfully so. If America wanted, we could copy the best aspects of other countries higher education models - the rest of the world would love to see Americans better educated, and would likely be more than happy to help. It's not ridiculous, it's not a scheme. It's basic common sense, and an investment. The rest of the developed world laughs at America for charging so much for college. They really do. It's a common punchline. It would be funny to me too, if I didn't have a distaste for schadenfreude. And hell yeah. Let's retire capitalism before we lose the oceans, insects, birds, steady climate and a life worth living.
loceng 5y ago

jazzkingrt 5y ago

Wow, there is a potentially a lot of money at stake here. It looks like I could be eligible to join this lawsuit if it goes forward.

eschulz 5y ago
This has happened before, with the Ivy League plus MIT university cartel being in real danger of complete destruction due to law suits. In those days the all the leaders in Congress and the US legal field got together to protect their elite alma maters. https://www.nytimes.com/1992/09/03/us/mit-ruled-guilty-in-antitrust-case.html https://www.nytimes.com/1992/09/03/us/mit-ruled-guilty-in-an... Today US universities can also count on assistance from the big banks for whom they generate tens of billions of dollars of government-backed loans on an annual basis. This antitrust scenario will continue to repeat itself, and I'm sure that former students of these universities will not be allowed into a legal position to get some of their money back or to harm them in any way.

jimbob45 5y ago

>...[allege] the universities engaged in price fixing and unfairly limited aid by using a shared methodology to calculate applicants’ financial need. This seems like the optimal way to run things though. In our current world where everything is "racist" and "sexist", how else can these entities shield themselves from lawsuit apart from sharing their methodologies? It seems like these entities were set up to fail from the beginning under these backwards rules.

lupire 5y ago
One school could have tried to compete on price by using the same formula but then applied a discount to all students. What's wacky is that we have allegations of "price fixing" based on claims that schools are unfairly charging far less than the fair market value of their product. These schools could easily double their prices and still make a profit... but they aren't trying to make a profit.

lupire 5y ago

The crux of the claim is that the schools "overcharged" students by admitting students who could afford to pay more, instead of rejecting those students and admitting different, poorer students. So the only people actually harmed are students who did NOT attend these schools, and paid more at a different school. That's not who the plaintiffs are. Essentially, wealthy students (who were admitted!) are claiming that they could have gotten better aid packages if the schools set prices based on something other than need, and competed for the value those students brought to the school. Since the schools allegedly endeavor to hit a target total revenue, while charging less in tuition than the cost of providing the education, the plaintiffs wanted poorer student to pay more so they could pay less. Smells like entitled wealthy people.

okwubodu 5y ago
No, the claim is that the schools named colluded to fix financial aid to avoid bidding wars over students that need aid. This is legal so long as their admissions process is need-blind. However, the filing repeatedly mentions that the defendants allegedly give preference to "children of wealthy donors". So it's save money by colluding on aid calculations or save money by picking wealthy applicants, and explicitly not both.

musicale 5y ago

The claim that they're doing so to "limit student financial aid" doesn't make sense: how are they going to raise tuition and fees to $100K/year without increasing student loans?