Elite US universities are facing a new antitrust lawsuit over financial aid practices

A new lawsuit has been filed accusing 40 of the most prestigious universities in the United States of colluding to inflate tuition costs by taking into account the financial assets of non-custodial parents when determining student financial aid . According to Reuters, The class action lawsuit, brought by a Boston University student and a Cornell University graduate, was filed late Monday in federal court in Chicago.

The named defendants include major academic institutions such as Harvard, Yale, Cornell, Georgetown, Northwestern and Dartmouth, as well as the nonprofit College Board, which allegedly developed the controversial financial aid method. The lawsuit alleges that this practice caused significant financial harm to students, particularly by eliminating competition among universities in providing financial aid packages to attract top candidates.

Plaintiffs’ attorneys argue that the College Board pressured schools in 2006 to adopt a policy that considered noncustodial parents’ assets when determining financial aid eligibility. According to Reuters, The schools have allegedly agreed to maintain this practice, which, according to the lawsuit, results in students paying thousands of dollars more than institutions that do not use this financial evaluation method.

“Paying tuition is a burden for almost every family,” Steve Berman, one of the attorneys who represented the students, said in a statement. “This case is about resolving a price fixing arrangement that has increased the cost of tuition.” Berman went on to point out that without this alleged collusion, schools likely would have competed to provide more generous financial aid.

The plaintiffs estimate that over 20,000 students could have been affected, and the lawsuit seeks more than $5 million in damages and an order halting the alleged price-fixing.

The schools named in the lawsuit, including elite institutions such as Stanford, Columbia, New York University and Duke, either declined to comment or did not immediately respond to requests for comment. per Reuters. The College Board, which was also named as a defendant, also declined to comment.

This lawsuit is the second major antitrust case in recent years to target U.S. colleges over financial aid practices. Previously, a case filed in Illinois led to a judge approving $284 million in settlements with several prestigious universities, including Columbia and Brown, over allegations that they favored wealthy applicants in the admissions process.

The recent case entitled Maxwell Hansen and Eileen Chang v. Northwestern University et al. will be heard in the U.S. District Court for the Northern District of Illinois.

Source: Reuters