Why The Class Action Suit Against Yale, Duke, And Other Top Schools Will Likely Be Dismissed

By Evan Gerstmann, Contributor
A group of 16 elite universities, including Yale, are accused of being a financial aid "cartel". (Photo by Christopher Capozziello/Getty Images) Getty Images

Four law firms are asking a federal judge to let them move ahead with a class action anti-trust suit against Yale University, Duke University and fourteen other elite, private universities. The complaint alleges that these schools “have participated in a price-fixing cartel that is designed to reduce or eliminate financial aid as a locus of competition, and that in fact has artificially inflated the net price of attendance for students receiving financial aid.”

There is no dispute that these schools participate in an organization called the 568 Presidents Group that uses a “consensus approach” to determining how much students can afford to pay. But Congress has given them an exemption under Section 568 of the Higher Education Act so that they can do exactly that.

Section 568 requires that colleges taking advantage of this anti-trust exemption use “need-blind admissions.” They can’t take applicants’ wealth into consideration in deciding whether to admit them. All of the members of the group (the “568 colleges”) have need blind policies.

The complaint alleges that they are not truly need blind. However, the complaint does not offer much evidence that this is true. For example, it alleges that nine of the schools “have considered the financial circumstances of students and their families in admissions—for example, by maintaining admissions systems that favor the children of wealthy past or potential future donors.” So, the theory is that favoring donors’ kids means that schools aren’t doing need-blind admissions. That theory is unlikely to pass muster. Judges are supposed to interpret the will of Congress. The policy of favoring donors’ kids, as ethically questionable as it may be, has been widely known for a long time. If Congress wanted to eliminate that practice in Section 568, surely it would have said so.

The complaint’s other theories are pretty speculative. It alleges that some of the universities’ enrollment management practices are stealth methods of violating need-blind admissions. Here is an example of that logic: “Notre Dame also employs an ‘enrollment management model.’ Announcing in 2010 the hire of its associate vice-president for undergraduate enrollment, Don Bishop, Notre Dame praised his ‘innovative marketing and financial aid strategies’ in prior enrollment management jobs. Announcing a new dean of admissions in 2019, Notre Dame touted her status as ‘a featured presenter at national enrollment management conferences and events.’ In addition, Notre Dame has a partnership with a software company that develops data-visualization tools, touting ‘improved scenario analyses on all data associated with an applicant or prospective enrollee.’ Notre Dame is thus using data analysis to shape need-aware admissions decisions.” 

One could scour this allegation for hours without seeing how it shows that Notre Dame is avoiding need-blind admissions. The complaint also relies on anonymous sources. For example, it states: “One anonymous enrollment manager has said: ‘Good luck getting any institution to tell you exactly how they handle ability to pay as a driver in their admit decision. . . . What they will say is ‘We’re need blind.’ That’s bullshit. They would never tell you exactly how they do it, but they do it all the time’.” Anonymous sources like this are not enough to get to a jury in federal court.

The complaint also cites a number of people who claim that financial aid would be more generous without using the 568 Group’s consensus approach to determining financial aid. But the point of Congress passing Section 568 is to allow a trade-off. The colleges get to use a consensus approach on financial need but they can’t take that financial need into consideration in making admissions decisions. One can agree or disagree with the wisdom of that trade-off, but that’s what Congress did.

To win this lawsuit, the plaintiffs need to show that the 568 Colleges didn’t really use need-blind admissions. They will probably fall well short of that goal.


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