Class (action) not dismissed: Fight to dissolve 568 Presidents Group continues

September 19, 2022

Illustration by Deborah Han

An ongoing class-action lawsuit alleges that in a higher education landscape without the 568 Presidents Group—a cohort of private universities who collaborate on financial aid calculations—the cost of attendance at 17 elite institutions would decrease dramatically. Nine could provide free attendance for all current students on financial aid; eight, including Georgetown, could reduce their net cost of attendance by an average of $12,000 annually.

The accusations were made public via nine former students who initially sued 17 of these universities in January, alleging the 568 Presidents Group of colluding, price-fixing, and deliberately limiting students’ financial aid. In response, the 17 universities, including Georgetown, the neighboring Johns Hopkins University and six Ivy League schools, filed a Motion to Dismiss in April in dispute of these claims.

On Aug. 15, this case was presented in front of federal judge Matthew Kennelly, who denied the universities’ attempt to dismiss the lawsuit. Per Judge Kennelly’s ruling, the class-action is to proceed to the discovery phase, in which parties of the lawsuit obtain more evidence from each other, which could ultimately result in a jury trial. The plaintiffs and defendants agreed to establish a definitive timeline for the proceedings by mid-November of this year. Tentatively, the final pretrial hearing is scheduled for May 2025.

Throughout the August hearings, the former students accused the 17 universities of violating Section 568 of the Improving America’s Schools Act of 1994, which outlines the extent to which universities can collaborate on setting tuition standards, and is where the 568 Presidents Group derived its namesake. 

Under federal antitrust law, private parties are prohibited under the Sherman Antitrust Act of 1890 from collaborating to set the market-wide price of goods and services. Section 568 of the Improving America’s Schools Act, however, creates an exemption to the Sherman Act by permitting schools to collaborate on the condition that they do not consider students’ financial situation in making admissions decisions.

Georgetown, along with eight other defendants in the lawsuit, publicly deems itself a need-blind school. The plaintiffs allege, however, that by adopting the shared Consensus Methodology in calculating aid, members of the 568 Presidents Group did in fact weigh students’ ability to pay as a part of admission processes for the purposes of eliminating price competition and artificially inflating their costs of attendance. For these reasons, former students allege, the 17 universities are not truly need-blind, and may not be exempted under Section 568.

“All 17 defendants systematically favored wealthy applicants in making admissions decisions,” according to the class-action’s official website. “Defendants effectively raised the net price of attendance, harming in the aggregate more than 200,000 students from working and middle-class families.” 

The 17 universities, on the other hand, contested the students’ arguments by claiming that they operated in line with antitrust exemptions. “[The] plaintiffs fail to plausibly allege a violation of the Sherman Act, have alleged injuries that are too speculative to satisfy antitrust injury and standing requirements, and have raised claims that are time-barred,” the universities’ dismissal motion reads.

Judge Kennelly was not the only person to reject the validity of the universities’ claims. The class action has garnered national attention, including the U.S. Department of Justice’s. In July, the Justice Department submitted a Statement of Interest to the court, which challenged the universities’ dismissal arguments. “An agreement between schools that admit all students on a need-blind basis and schools that do not is beyond the scope of the 568 Exemption,” the agency wrote. 

If plaintiffs prevail in this case, the outcome of this lawsuit could monumentally alter the financial model of higher education, especially in the context of rising tuition costs. “This is the first time that antitrust law is being invoked to seek damages from elite U.S. universities for colluding to limit student financial aid,” Robert D. Gilbert, managing partner of Gilbert Litigators & Counselors and lead firm for the plaintiffs, explained in an email to the Voice. “The 17 elite universities have for nearly 20 years participated in a price-fixing cartel that inspired to reduce the financial awards to admitted students, systematically increasing the net tuition prices paid by thousands of students and their families.” 

The former students claim that if each university chose to allocate an additional 2 percent of its unrestricted endowment funds to financial aid—a percentage that would still permit robust endowment growth, the plaintiffs argue—the cost of attendance would plummet, and surplus aid could be distributed. 

“Each financial aid student at Georgetown University could receive, on average, an additional $4,493 in scholarship support per year toward tuition, room, board and fees if Georgetown competed in offering financial aid for students rather than continuing to collude,” Gilbert wrote.

Correction: This article has been updated to attribute a written statement to Robert Gilbert. 

Joanna Li
Eons ago, Joanna was the executive news editor. Much has changed, but she still enjoys chess, researches altruism, and has a lot of love for people in this magazine. A lot.

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