College Board, Universities Charged in Financial Aid Conspiracy

The College Board, a nonprofit that supports college admissions programs, and 40 private universities are facing a proposed class-action lawsuit accusing them of a financial aid-related scheme that violates U.S. antitrust law and exacerbates student debt.

The lawsuit, filed Monday in the U.S. District Court for the Northern District of Illinois, targets the College Board’s alleged efforts to require schools to consider the income and assets of “noncustodial parents” when they Make decisions about non-governmental financial support.

Executives at institutions such as Harvard University and Northwestern University agreed to adopt the collective aid strategy, which harmed the competitive process and unlawfully inflated the net price of tuition, the complaint says.

A Boston University student and Cornell University graduate brought the case representing a class of students who had a noncustodial parent whose financial information was used as a factor in the amount of support provided. In their lawsuit, they cite various statistics about tuition fees that have risen sharply in recent decades, adding that the defendants’ conduct “only made matters worse.”

The two are represented by Hagens Berman Sobol Shapiro LLP, a plaintiffs’ firm that has been at the forefront of antitrust lawsuits brought by college athletes over payment for their name, image and likeness.

Hagens Berman and the College Board did not immediately respond to requests for comment.

Noncustodial parents are defined by the College Board as parents who “have not lived with the student for most of the past year.” The College Board began pushing schools in 2006 to add their financial assets to students’ non-federal financial aid applications, the lawsuit says, a move that affected a significant portion of applicants.

The federal government’s methodology for student aid does not take this criterion into account.

“For a significant minority of students (those from single-parent families),” the 2006 change “essentially doubled at least parents’ disposable assets/income virtually overnight,” the lawsuit says.

Eileen Chang, a named plaintiff who graduated from Cornell University in 2021, said her noncustodial parent’s income worked to her detriment. The parent, who had a much higher income than his custodial parent, was disabled and unable to contribute, but Cornell told her, “Non-custodial parents are expected to help pay tuition,” the lawsuit says.

Cornell, Harvard, Northwestern and Boston universities did not immediately respond to requests for comment.

The College Board and universities are accused of engaging in a conspiracy to reduce financial aid levels for a subset of students in violation of the Sherman Act. The complaint allegedly targets a market defined by U.S. News & World Report as the top 50 private universities over the past 15 years.

The average net price of a school at the 40 universities targeted in the lawsuit is $6,200 higher than at the 10 other private universities that do not require financial information from noncustodial parents, the lawsuit says.

The case is Hansen v. Nw. Univ., ND Ill., 1:24-cv-09667, 10/7/24