These top U.S. universities may have duped students out of financial aid

A new federal lawsuit accuses schools of colluding to limit how much money students got.

Shutterstock / Columbia University

When I applied to college, I only had enough application money for two schools. I got into both, despite my checkered academic past and unimpressive socioeconomic status. I was stoked. Like so many, I thought that going to a “good” school meant I would be guaranteed success for life. No one told me — especially not the financial aid advisors at Columbia University — that I was actually just being guaranteed debt for life. Now 16 top U.S. schools, including my own alma mater, are being sued for allegedly colluding to limit financial aid.

The lawsuit, which was filed yesterday in Illinois federal court, alleges that the way the universities work together to determine financial awards constitutes an antitrust violation. See, schools are only allowed to collaborate on deciding tuition structure and financial aid if they use a “need-blind” admissions process, but the lawsuit alleges that some of these 16 schools do actually take students' ability to pay into consideration in certain circumstances. If that’s the case, the way that these schools are working together amounts to price fixing.

The schools named in the suit are Yale, Georgetown, Northwestern, Brown University, the California Institute of Technology, the University of Chicago, Columbia University, Cornell University, Dartmouth College, Duke University, Emory University, the Massachusetts Institute of Technology, the University of Notre Dame, the University of Pennsylvania, Rice University, and Vanderbilt University.

These academically venerable institutions are all part of the 568 Presidents Group, a consortium of 28 top schools that is also commonly called the “568 cartel” for the way that it allegedly eliminates competition in pricing between member schools and overcharges low- and middle-income students. If the allegations are true, it would mean the highest schools in the land are operating like a higher ed crime syndicate. Go figure.

The lawsuit, which is written in passionate legalese, basically accuses these elite schools of policing upward mobility. “At least nine Defendants for many years have favored wealthy applicants in the admissions process. These nine Defendants have thus made admissions decisions with regard to the financial circumstances of students and their families, thereby disfavoring students who need financial aid,” wrote the plaintiffs in the suit. “Defendants' misconduct is therefore particularly egregious because it has narrowed a critical pathway to upward mobility.”

In case you haven’t noticed, student loans are a BFD. Millions of Americans are saddled with paralyzing debt. Not only that, but this case is a first step towards holding schools — instead of students — responsible for unethical student loan practices. Lawyers told the Wall Street Journal that more than 17,000 former students going back as far as 2003 could be eligible to become plaintiffs in the suit, according to the outlet. I, personally, am staying tuned.