Lawsuit From Former Students Alleges Financial Aid Price Fixing at Elite Universities

A lawsuit was filed by the U.S. District Court in the Northern District of Illinois Monday against sixteen elite universities. Plaintiffs claim that the schools named conspired with each other to decrease institutional financial aid packages to students, violating antitrust regulations.

The lawsuit was filed by five former undergraduate students of three schools named in the suit. Sia Henry (Duke), Michael Maerlander, Brandon Piyevsky and Kara Saffrin (Northwestern) were all former students who attended their schools through need-based financial assistance. The plaintiffs claim all their universities belong to or have been members of the 568 Presidents Group. It is an association of universities established in 1998 and that they sued. Argument “has specifically aimed to lower or eliminate price competition within its members. This conspiracy has resulted in the artificially inflating of the attendance cost of financial-aid beneficiaries at Defendants schools.

The 568 Presidents’ Group Named after itThe Improving America’s Schools Act of 1994 (Section 568) “stipulates the conditions within which financial officers of different colleges and universities can establish common approaches in awarding institutional or non-federal student aid.” It is important to note that the law does not allow financial aid professionals to communicate between institutions regarding aid. The plaintiffs claim that this provision was violated by schools. In other words, The groupExists to allow universities from different backgrounds to collaborate to the full extent permitted by federal law. 

The 568 Presidents’ Group Several schools claim that the cooperation among them has been “amazing.”End result[ed]For a better and more reliable evaluation of [a]Family’s financial situation.” Website mentions that there must be a consistent way of valuing assets such as rental property owned by student families, as well as liabilities such as “unusually high dental and medical expenses”, when deciding who receives financial aid. According to the group, institutional funds will not be distributed in an unfair manner and students will benefit from the more equitable methodology.

Officials at Many schools from both within and outside of the group claim that the consensus method leads members to offer less generous financial aid packages than schools outside the group. Caesar Storlazzi (the Yale former director for student financial services) claimed that Yale was unable to provide aid for students who are financially needy after it left the group in 2008.

Yale has resigned from the 568 Group and Yale can now give more assistance to families than it would under the consensus method. In 2008, Storlazzi stated that. Yale now takes a lower percentage of the assets and incomes of families than 568 schools.

Sally Donahue was a former Harvard director of financial assistance According to the Yale Daily NewsHarvard did not join the cartel in 2008. The consensus method would have forced Harvard to offer need-based packages of financial aid that were smaller than Harvard preferred.

A 2015 survey by Education Conservancy revealed that an anonymous university president was surveyed ReferredTo the 568 Presidents Group, as an “insider’s game” from a “bygone era.”

Plaintiffs further claim that some members of this group may not be 568 compliant as they openly favor children of donors and alumni when making admissions decisions. They also believe that their awareness of applicants lack of financial need “disfavors students who require institutional support to attend.”

Iain Murray is the Vice President for Strategy at Competitive Enterprise Institute. He believes the complex federal regulations surrounding student loan loans has created an environment that permits this type of behavior.

Murray stated that “one of the issues with areas with complex federal regulations (such as student financial aid) is that it makes market competition more difficult to work.” There are reasonsSend an email. When there are fewer regulations, it’s easier for price competition to be seen. While I am unable to confirm or deny that there have been any price-fixing, it is possible to see if this has occurred if the federal laws were less complex.

Both politicians and American families have been frustrated by the ever-increasing college cost. Although 568 Presidents Group schools may offer less financial assistance than others, it is not a problem specific to this group. There are many. There is mounting evidenceThe rising cost of tuition is explained by the increase in federally-backed student loan. Because families are eligible for subsidies, federally-backed student loans encourage colleges to increase tuition costs. The lawsuit claims that colleges operate in businesslike ways by restricting the admissions of students who are truly low-income and subsidizing them to reduce the money they have to pay.