Northwestern could fully cover the cost of tuition, room, board and fees for all current students on financial aid if the University had not engaged in a price-fixing cartel with other universities, former students alleged.

Nine former students of some of the 17 U.S. private, elite universities in the alleged cartel, including NU, filed a lawsuit against them in January for alleged antitrust violations. 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 the lawsuit. The former students filed the complaint on behalf of more than 200,000 similarly situated people. 

In a memorandum filed by plaintiffs June 10, the former students state that if all of the universities allocated an additional 2% of unrestricted endowment funds to financial aid, nine of the universities, including NU, could provide free tuition to all students currently on financial aid. It also found the net price for students on financial aid at the other universities would fall by an annual average of almost $12,000.

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.

The memorandum responds to an April motion by the universities to dismiss the case.

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 “anticompetitive actions” provided all members of the group admit all students on a need-blind basis. However, the lawsuit also alleges nine of the universities, including NU, have considered financial circumstances of applicants and their families as an admissions factor. 

The defendants argued for dismissal on the basis of this exemption, defending their alleged practices of favoring wealthy applicants by claiming the exemption applies unless they specifically “disfavor financial-aid applicants.”

“As a threshold matter, given a finite number of undergraduate seats at each Defendant, the premise that favoring wealthy students does not necessarily involve disfavoring less wealthy students is logically nonsensical: every student admitted with regard to wealth is one fewer spot for a student in need,” the memorandum read.

The other 16 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, University of Pennsylvania, Rice University, Vanderbilt University, Yale University and Johns Hopkins University — which was added as the 17th defendant in an amended complaint in February.

A hearing on the defendants’ motions is scheduled for August 2, 2022, in Illinois federal district court.

The University has stated it does not give comment on ongoing litigation.

Clarification: this story has been updated to more accurately reflect the nature of the memorandum’s allegations.

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