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A federal lawsuit filed in Illinois over the weekend accused 16 private universities, including Rice University in Houston, of discriminating against students in need of financial aid by using a shared formula to calculate financial need that unfairly limits aid to each student.
As reported by The Texas Tribune, the lawsuit’s plaintiffs are five former students who say the universities are violating antitrust laws, which prohibit competitors from conspiring to set prices. The suit claims that by limiting financial aid, this group of schools engaged in price-fixing, reducing competition and inflating the cost of attendance for those who receive financial aid. The plaintiffs calculated that the scheme affects more than 170,000 financial aid recipients at a cost running into the hundreds of millions of dollars.
Rice University officials responded to the lawsuit with the following statement, “After reviewing this lawsuit, we believe it is without merit. Rice University is proud of its financial aid practices and we are prepared to vigorously defend them in court.”
“In critical respects, elite, private universities like Defendants are gatekeepers to the American Dream,” the lawsuit states. “Defendants’ misconduct is therefore particularly egregious because it has narrowed a critical pathway to upward mobility that admission to their institutions represents.”
The schools named are members of the 568 Presidents Group, named after Section 568 of the law that mandated them to admit students on a need-blind basis. In addition to Rice University, the member schools are: Amherst College, Boston College, California Institute of Technology, Claremont McKenna College, Columbia University, Cornell University, Dartmouth College, Davidson College, Georgetown University, Grinnell College, Johns Hopkins University, Massachusetts Institute of Technology, Middlebury College, Northwestern University, Pomona College, Swarthmore College, University of Notre Dame, Wellesley College, Williams College and Yale University.
Universities that do not take into account a student’s financial aid, known as a “need-blind policy,” are allowed to collaborate on guidelines to assess a candidate’s financial need, as part of an exemption of antitrust laws provided by Congress in 1994.
In 2003, the group established a shared methodology to determine a family’s ability to pay for college. Schools were prohibited from favoring wealthier candidates so they could give away less scholarship money. However, the lawsuit claims that nine of the schools do consider a student or student’s family’s financial situation at certain points of the admissions process, allegedly admitting wealthy offspring of potential donors. It also accuses some schools of giving preference to wealthier students on the university’s waitlist.
In conspiring to shrink the amount of funding they provide students, they are not exempt from antitrust laws.
Rice is listed in the lawsuit as one of seven defendants that “may or may not have” considered applicants’ financial needs. And it argues those seven schools should have known the other nine were not abiding by need-blind admissions practices. Rice’s student population is majority-white, with 7.3% Black and 12.3% Latino undergraduate students. According to www.collegefactual.com, 58.3% of freshmen at Rice receive some form of financial aid, with the average amount totaling $44,815. Students from low-income families receive an average of $61,713 in aid during their first year.
The lawsuit asks for a permanent end to the collaboration among the schools, as well as damages.