Georgetown and other national universities allegedly part of price-fixing cartel to limit financial aid

January 12, 2022

Illustration by Deborah Han

Georgetown and 15 other top private universities were named defendants in a federal antitrust lawsuit filed on Jan. 9. The suit alleges that the self-described need-blind universities colluded to raise the net price of attendance by illegally considering students’ financial circumstances in admissions decisions.

Representatives of five former students of three of the schools in question filed the initial suit, but the suit is a class action, meaning that it was filed on behalf of a larger group of people. Since 2003, the plaintiffs allege that the universities’ conduct has harmed at least 170,000 current and former students, all of whom could be eligible to join the suit.

Federal antitrust laws prohibit price-fixing, agreements among competitors to set the price of a good or service. Georgetown and the other defendants are part of the 568 Presidents Group, a set of schools that work together to create common standards for allocating financial aid. Under the Improving America’s Schools Act of 1994, antitrust laws do not apply to such inter-university agreements to set financial aid standards on the condition that universities admit students without regard for students’ financial circumstances. As long as the defendants’ admissions are need-blind, their agreements to set financial aid standards do not constitute price-fixing under antitrust law.

While all the defendants claim to be need-blind, in accordance with federal law, the lawsuit alleges that Georgetown and other schools’ admissions are not truly need-blind. Citing statements from former school officials, the lawsuit argues that many top universities give preferential consideration to students whose families could become large donors, make admissions decisions for waitlisted students based on students’ ability to pay tuition, and consider the amount of money the university must spend on need-based scholarships when selecting its student body.

Nine of the 16 defendants were accused of directly making admissions decisions based on students’ financial circumstances. These schools were Columbia University, Dartmouth College, Duke University, Massachusetts Institute of Technology, Northwestern University, University of Notre Dame, University of Pennsylvania, Vanderbilt University, and Georgetown.

Georgetown, according to the allegations, prioritizes the children of potential donors in admissions. “On the fundraising side, we also have a small number of ‘development potential’ candidates,” Charles Deacon, Georgetown’s dean of admissions since 1972, once said to a reporter. “We have children of Supreme Court justices, senators, and so on apply. We may give extra consideration to them because of the opportunities that may bring.”

The seven other defendants were not accused of favoring wealthier students in admissions, but the lawsuit alleged that they conspired with the other defendants in inflating the net cost of attendance. These schools were Brown University, California Institute of Technology, University of Chicago, Cornell University, Emory University, William Marsh Rice University, and Yale University.

The recent lawsuit is not the first of its kind. The U.S. Department of Justice brought charges against the eight Ivy League schools and Massachusetts Institute of Technology in 1991 for conspiring to set the value of financial aid. The suit was resolved when the Ivy League Schools signed a consent decree agreeing to cease colluding to determine financial aid rewards and when MIT later settled.

Shortly after the Justice Department case, Congress passed the Improving America’s Schools Act and its corresponding antitrust exemption. The 568 Presidents Group was created in 1998, named after the part of the legislation that contains the exemption, Section 568.

Some of the 568 Presidents Group’s members were not named as defendants in the lawsuit. The suit classifies these schools as part of a separate market from the defendants, arguing that the “elite, private universities” party to the lawsuit constitute their own category of schools that compete directly with each other. Other members of the 568 Presidents Group fall into a different class of institution than the named defendants, so those members are not subject to the same liability for colluding with the defendants.

A university spokesperson did not comment in time for publication.

Ethan Greer
Ethan is an assistant news editor for the Voice and a sophomore in the College. In his free time he enjoys eating copious amounts of Chipotle.

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