Northwestern among 16 universities sued for allegedly colluding to limit financial aid

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Angeli Mittal/Daily Senior Staffer

Weber Arch. The lawsuit, filed Sunday, states that 16 top ranking universities “have participated in a price-fixing cartel that is designed to reduce or eliminate financial aid.”

Isabel Funk and Isabelle Sarraf

Northwestern is being sued for alleged antitrust violations in collusion with 15 other U.S. universities to illegally reduce student financial aid.

The universities allegedly engaged in price-fixing designed to reduce or eliminate financial aid and artificially inflate the net price of attendance for financial aid recipients, according to a lawsuit filed in Illinois federal court late Sunday. As a result of the collusion, the lawsuit claims the universities have collectively overcharged more than 170,000 financial aid recipients by at least hundreds of millions of dollars over the last two decades.

Five former students who attended some of the universities brought forward the lawsuit. Two of the plaintiffs, Brandon Piyevsky (Weinberg ’17) and Kara Saffrin (Communication ’18), received need-based financial aid from NU and paid for some of the costs of tuition, room and board.

NU and the other universities are part of the 568 Presidents Group, or “568 Cartel,” which, in 2003, set a formula known as the Consensus Methodology for using applicants’ ability to pay to determine net price. 

A legal exemption to antitrust laws permits these “anticompetetive actions” provided all members of the group admit all students on a need-blind basis. However, the lawsuit also alleges that nine of the universities, including NU, have considered financial circumstances of applicants and their families as an admissions factor. That goes against the definition of need-blind admissions policies, which means NU is not immune from the antitrust laws and has not qualified for the exemption since at least 2003.

Additionally, the lawsuit claims NU’s definition of a need-blind policy on its website is contrary to the statutory definition. The lawsuit adds that by privileging wealthy applicants in the selection process, the universities must deny admission to some students because of their financial situation. According to the lawsuit, just 3.7% of NU’s undergraduate students come from the bottom 20% of the income distribution.

“At Northwestern, a separate admissions process exists for the wealthy and well connected,” the lawsuit states.

The lawsuit cited a 2019 Daily article, which revealed University President Morton Schapiro personally reviews some applications and makes their admissions decisions, including those connected with wealthy donors and legacy students. According to the lawsuit, Schapiro’s involvement in admissions decisions for applicants associated with wealthy donors was not public until revealed by The Daily’s reporting in 2019.

The other 15 universities involved in the lawsuit are Brown University, California Institute of Technology, University of Chicago, Columbia University, Cornell University, Dartmouth College, Duke University, Emory University, Georgetown University, Massachusetts Institute of Technology, University of Notre Dame du Lac, University of Pennsylvania, Rice University, Vanderbilt University and Yale University.

“These elite institutions occupy a place of privilege and importance in American society. And yet these same Defendants, by their own admission, have participated in a price-fixing cartel that is designed to reduce or eliminate financial aid as a locus of competition,” the complaint reads.

University spokesperson Jon Yates said NU “(does) not comment on pending litigation.” The Daily was not able to reach the Office of Undergraduate Financial Aid for immediate comment.

This is a developing story and will be updated when more information is available.

Email: [email protected]

Twitter: @isabeldfunk

Email: [email protected]

Twitter: @isabellesarraf

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