A lawsuit filed in Illinois federal court on Sunday, Jan. 9 alleges that 16 colleges and universities across the country, including Northwestern University, have illegally conspired to limit the financial aid that they offer to students.
The plaintiffs in the suit are five former students at some of these institutions, and the lawsuit also named the University of Chicago as a defendant, as well as several Ivy League universities.
“These same Defendants, by their own admission, 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,” the lawsuit states.
According to the lawsuit, for as long as two decades many of the named schools have violated federal antitrust laws by working together to raise the cost of attendance and decrease financial aid payments. In the past, these colleges have been able to collaborate on admissions decisions and strategies thanks to a law that exempts colleges from antitrust regulations if “all students admitted are admitted on a need-blind basis,” meaning that financial need is not a factor in accepting or denying a student.
But the new lawsuit filed Sunday argues that “far from following this practice, 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.”
George Galland, a local Evanston resident and longtime civil trial lawyer for Miner, Barnhill & Galland in Chicago, told the RoundTable that the firms representing the plaintiffs in this case are “heavy hitters” in antitrust litigation. The lawsuit presents a “big problem” for the universities named as defendants, according to Galland.
“It’s a fascinating lawsuit, and it’s going to be a big lawsuit,” he said. “The defendants are going to spend a lot of money trying to defend it, and goodness knows what will eventually happen.”
The suit even explicitly cites a 2019 article in The Daily Northwestern titled “Northwestern President Schapiro says he reads applications of some legacy, donor students.” According to that story, President Morton Schapiro openly admitted to personally reading the applications of more than 500 prospective students each year. Normally, the admissions and alumni donor offices do not communicate to ensure that any family donations do not factor into admissions decisions. In this case, though, Schapiro happens to be in the unique position of having access both to donor information and to applicant information.
For that article, Schapiro told reporters that the applications he reviews “are suggested by all sorts of people,” including everyone from “politicians to famous alums to trustee members.” Sunday’s lawsuit concludes that Schapiro’s involvement in certain admissions decisions serves as proof that “at Northwestern, a separate admissions process exists for the wealthy and well connected.”
According to the Wall Street Journal, which on Jan. 10 broke the news about the lawsuit, more than 170,000 students on financial aid at the named universities could become eligible plaintiffs in the case. Before that, the plaintiffs will have to succeed in getting a court to certify this case as a class action lawsuit on behalf of any students who received some amount of financial aid, Galland said.
“Knowing how big firms operate, I would expect a massive motion to dismiss this case on the pleadings, which I would expect to fail,” Galland told the RoundTable. “They will spend hundreds of thousands if not millions of dollars trying to get this case dismissed.”
A spokesperson for Northwestern told the RoundTable Monday afternoon that the university does not comment on pending litigation.Presiden
“I can tell you this: the presidents of these universities got this news, and it did not make their day,” Galland said.