The plaintiffs in a class action antitrust lawsuit against 16 private colleges and universities over their admissions policies have expanded their lawsuit to add Johns Hopkins University. The plaintiffs are also making new arguments in their complaint about the endowments of the colleges involved, suggesting that they are so wealthy that they could help low-income students without allegedly colluding on their policies.
Hopkins has denied any wrongdoing, and supporters of the colleges dispute the argument on endowments as well.
The suit was filed last month against 16 private colleges and universities, charging them with running a “cartel” and violating antitrust laws in the way they calculate aid awards, thus forcing thousands of students to pay more than they should have to in order to enroll. The suit was filed by five recent graduates but seeks to be certified as a class action on behalf of thousands of additional students.
The original targets of the suit are Brown, Columbia, Cornell, Duke, Emory, Georgetown, Northwestern, Rice, Vanderbilt and Yale Universities; the California Institute of Technology; Dartmouth College; the Massachusetts Institute of Technology; and the Universities of Chicago, Notre Dame and Pennsylvania.
The colleges are members of the 568 Group, which consists of 21 colleges and universities that have a federal exemption from antitrust laws in developing and using a common methodology to award need-based aid. The exemption was created by Congress after the Ivy League colleges and MIT were charged by the Justice Department with price-fixing because they consulted one another on the aid to be given to students admitted to more than one institution.
In 1991, all eight members of the Ivy League and MIT were charged with price-fixing. The way it worked was that representatives from the colleges would meet to discuss their anticipated aid offers for students who had been admitted to more than one college. This practice limited price competition, prosecutors said. The colleges’ leaders said the approach allowed students to choose colleges based on fit rather than on price. The issue was much debated, but the Ivy League colleges and MIT eventually agreed to end the practice.
The new suit acknowledges that the colleges have received an exemption from antitrust laws but says that the colleges are not in fact need blind. It contends that Johns Hopkins “joined the cartel” by adopting the 568 Group’s “consensus methodology” for determining financial aid. The suit also argues that the colleges aren’t really need blind because they consider the need, for example, of students on their waiting lists.
The universities involved generally have not commented (in detail) on the suit, except to say they are not breaking the law.
“We are reviewing the complaint, but we are confident not only that we have operated fully within the law but that our financial aid and admissions practices have put a Johns Hopkins education within reach for the highest achieving students from all socioeconomic backgrounds,” a Hopkins spokeswoman said in a written statement. “The university has pursued a series of initiatives to fuel student access and social mobility over the past 12 years, including admitting students on a permanently need-blind basis, replacing loans with scholarship grants in undergraduate financial aid packages, reducing expected family contributions, and eliminating legacy preferences for children of alumni.”
The suit provided lists of the endowments of all the colleges from 1994 through 2021. The exemption from antitrust laws was first provided in 1994.
Notre Dame’s endowment grew by 2,460 percent in that time period. The smallest gain was Emory’s at 388 percent.
But Phillip B. Levine, the Katharine Coman and A. Barton Hepburn Professor of Economics at Wellesley College, noted that “the fact that the members of the 568 Group have such large endowments is part of the reason they are able to charge lower-income students lower net prices than they would pay at a leading public institution.”
He continued, “It is true that these institutions have seen dramatic endowment returns in the past year. The additional funding from those returns will show up in their budgets gradually over the next few years. It is still to be seen how they choose to spend that money. Additional financial aid is one option.”