On the Price Fixing Class Action Against Elite Universities

When the group known as Students for Fair Admissions sued Harvard University, alleging discrimination against Asian American applicants in the admissions process, we said that while their argument indeed had merit, we didn’t expect they’d win. And why? Because we believe they positioned the case incorrectly. As an example, SFFA presented well-rounded Asian American students and charged that these students should have earned admission on account of their grades and scores. Yet students with perfect grades and perfect scores — in fact students that could often fill five entire incoming classes at Harvard — are denied by Harvard each and every year. It’s not just about perfect grades and perfect scores. It’s also about being interesting. It’s about being singularly talented. Schools like Harvard don’t seek out well-rounded students — and they have every legal right to not seek out such students. It’s why we were dumbfounded when the group’s well-heeled attorneys based their case on students with uninteresting, well-rounded profiles. Yet in the class action lawsuit filed this week in which 16 elite universities are charged with violating federal antitrust law by conspiring to price fix and violating Section 568 of the Higher Education Act, we believe the suit not only has merit — but we expect the plaintiffs will prevail. Yes, we hereby issue a crystal ball forecast. We call game for the plaintiffs.

As Stephanie Saul and Anemona Hartocollis report for The New York Times in a piece entitled “Lawsuit Says 16 Elite Colleges Are Part of Price-Fixing Cartel,” “The allegations hinge on a methodology for calculating financial need. The 16 schools collaborate in an organization called the 568 Presidents Group that uses a consensus approach to evaluating a student’s ability to pay, according to the lawsuit. Under federal antitrust law, these universities are permitted to collaborate on financial aid formulas if they do not consider a student’s ability to pay in the admissions process, a status called “need blind.” The group’s name is derived from a section of federal law permitting such collaborations: Section 568 of the Higher Education Act. The suit claims that nine of the schools are not actually need blind because for many years, they have found ways to consider some applicants’ ability to pay.”

These allegations have merit. After all, take a look at the vast majority of application supplements to elite colleges. The vast majority ask students if they need financial aid. Admissions officers can see this answer. If these institutions were truly need-blind, why would this prompt not be on a separate document that the very people evaluating a student’s case for admission could not see? Case in point? Johns Hopkins University, a university that — thanks to a generous donation by former New York City Mayor Michael Bloomberg — made headlines in 2020 for eliminating legacy preference in its admissions process. For a school that hopes to be a school of the people and for the people, why does the below prompt appear on The Common Application? We hope this becomes Exhibit A in discovery.

And it’s not like this is the only evidence to suggest many elite colleges are truly need-aware rather than need-blind. The New York Times reporters go on, “The University of Pennsylvania and Vanderbilt, for example, have considered the financial needs of wait-listed applicants, the lawsuit says. Other schools, the lawsuit says, award ‘special treatment to the children of wealthy’ donors, which, given the limited number of spots, hurts students needing financial aid.” All true. Elite colleges do offer preference to students who are the progeny of major donors. After all, these students help subsidize the educations of students who need financial aid. And, yes, many elite colleges are even open about how financial need is a factor for waitlisted applicants, the fine print — if you will — beneath their “need-blind” admissions policies.

This class action lawsuit is going to be one giant data dump that we expect to be reporting on extensively over the next year or two. It’s going to be more illustrative of how elite colleges aren’t actually need-blind than the SFFA v. Harvard case was illustrative of Asian American discrimination in admissions. Yet do keep in mind that while these students may think they didn’t get in just because they checked the financial aid box, chances are they didn’t get in largely because they submitted not so compelling applications. Instead of looking within, they’re looking for an external excuse. The fact is, there are over 3.6 million high school seniors in America. If a student is in the top half of the top 1%, that’s 18,000 students by our arithmetic. That’s more than all of the slots in the incoming classes at the eight Ivy League institutions combined and it doesn’t account for international students, recruited athletes, low-income students, first-generation college students, etc. So while this suit has merit and the attorneys for the plaintiffs are right to doubt these institutions’ compliance with Section 568 of the Improving America’s Schools Act of 1994, it’s likely not entirely why these plaintiffs didn’t get in. Just saying.