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College Price-fixing Lawsuit is More Evidence that Radical Change is Needed in US Higher Education

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A federal lawsuit was filed in Chicago against 16 of the nation’s top private universities on Jan. 9. The lawsuit, filed on behalf of five former undergraduate students who attended some of the institutions, argues that the colleges and universities used antitrust laws to limit students’ financial aid.   

The universities and colleges involved include Brown, the California Institute of Technology, the University of Chicago, Columbia, Cornell, Dartmouth, Duke, Emory, Georgetown, the Massachusetts Institute of Technology, Northwestern, Notre Dame, the University of Pennsylvania, Rice, Vanderbilt and Yale.

The lawsuit takes aim at the universities’ method to calculate a student’s financial need. Each of the targeted institutions is part of a collaborative organization called the 568 Presidents Group. Under federal antitrust laws, this organization can collaborate on formulas used to determine students’ financial aid awards. 

However, the universities are only permitted to collaboratively determine a student’s financial need if the entire group refrains from considering the student’s financial standing during the admissions process. This is referred to as being “need-blind.”

The lawsuit claims that nine of the 16 universities included in the group are not truly “need-blind” as advertised. 

More specifically, the lawsuit claims the University of Pennsylvania and Vanderbilt have considered the financial need of waitlisted applicants. By doing this, they are breaking the promise advertised on their websites of being a fully “need-blind” institution for domestic applicants. 

The lawsuit also highlights the fact that other universities that participate in the 568 Presidents Groups give “special treatment to the children of wealthy” donors. Giving special treatment to those who obviously have connections to wealth compromises their “need-blind” approach. Therefore, those who don’t have a monetary connection are often at a disadvantage.

While it is frustrating that these elite colleges don’t have an equitable admission process, it is hard to say it is surprising. There have always been connections between wealth and access to higher education, only further heightened in elite private schools. In a study conducted in 2017, it was found that less than 5% of students at Ivy League and other elite colleges came from the bottom 20% of the income distribution while more than 14% came from the top 1%. 

The prestigious private universities targeted by the lawsuit are all contributing to a cycle that hurts those who come from lower-income families and other marginalized groups. Even though some of the universities may not directly be participating in the illegal processes themselves, their membership in the 568 Presidents Group upholds the problematic approach to minimizing student aid. 

The lawsuit refers to the group as the “568 Cartel” due to their highly cruel and — what they argue to be — illegal practices. 

Moreover, the lawsuit claims that an estimated 170,000 students at the 16 universities have been under-awarded financial aid and are consequently overcharged for tuition. If this eventually proves true, all of these students deserve to be compensated both for the aid they did not receive and for the troubles that may have stemmed from inadequate financial aid. 

While the students who have been personally victimized must be compensated, more must be done. In order to bridge the higher education gap between wealthy and low-income students, the concept of higher education needs to be reimagined. 

The price-fixing lawsuit does not represent the first time the college admission process has been involved in legal battles. In the famed 2019 “Varsity Blues” scandal, it was found that parents had been paying hundreds of thousands of dollars to a consultant who would ensure their child’s spot at a top university. This scandal proved that those who are financially well-off can buy their spot into elite colleges, yet again showing the disadvantage for those who don’t come from wealthy families. 

Private and public universities alike must reimagine their budget practices to minimize the costs for all middle and low-income students. This can be done by increasing taxes on the ultra-wealthy to help fund higher education. In 2014, Germany successfully eliminated tuition costs for all students from the European Union. Similarly, Ireland, France, Norway, Denmark and Sweden do not charge for EU residents. America should look toward these European nations and see that affordable college is possible. 

Most importantly, colleges and universities must shift their focus from minimizing possible financial aid awards to maximizing their students’ benefits. 

While many would call this idea radical, it is important to consider the extravagant changes higher education has gone through in the past century. 

When former President Ronald Reagan was elected governor of California in 1967, he called for a reinvention of the state’s public higher education systems. He would go on to end free tuition at the University of California and cut higher education funding by 20%. 

His reasoning? Taxpayers should not be responsible for “subsidiz[ing] intellectual curiosity.” 

Why not? Why shouldn’t taxpayers be responsible for training the doctors who may treat them, the accountants who manage their finances or the engineers that design their cars? The list goes on. Higher education is necessary for a well-functioning society, and it cannot go undersupported by taxpayers. 

The federal lawsuit filed against the 16 elite universities further sheds light on the mountainous problems that the U.S. higher education system faces. In order to have a well-educated population and to continue to advance in innovation, the U.S. must minimize the financial burden of higher education. Radical change is not unattainable. 

Claire Schad is an Opinion Staff Writer. She can be reached at schadc@uci.edu