ITHACA, N.Y.—Cornell University is one of 16 universities named in a class action lawsuit filed this week over alleged student financial aid collusion practices in violation of antitrust laws.
The suit, which is available to read here, demands damages on behalf of five plaintiffs (plus “all others similarly situated”) as well as an injunction against the defendant schools from “continuing to illegally conspire regarding their pricing and financial-aid policies.” It names Cornell among 16 other schools including Duke University, Brown University, University of Chicago, Columbia University and others—the “568 Cartel,” as deemed by the lawsuit, referring to Section 568 of the Improving America’s Schools Act of 1994.
That section provides an exemption to anti-trust laws for schools where “all students are admitted on a need-blind basis,” and financial capacity of students and their families are not considered. Those schools are accused of violating that tenet through the “consensus methodology,” a “common formula for determining an applicant’s ability to pay.”
An article from 2001 shows that then-Cornell president Hunter Rawlings mentions the formulation of the “consensus approach,” but in the context of determining which students are eligible for financial aid among schools claiming Section 568 exemptions. That very determination method seems to be the root of the class action suit.
Cornell spokesperson Abby Butler declined to comment on the suit. It was first reported by the Wall Street Journal. The plaintiffs are named as Sia Henry, Michael Maerlander, Brandon Piyevsky, Kara Saffrin, Brittany Tatiana Weaver and others, presumably all student applicants.
The complaint is 61 pages, filed in Illinois, and allege that “these defendants 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 suit argues that the defendants have admitted students at least in part based on the “financial circumstances of students and their families, thereby disfavoring students who need financial aid.”
The latter conduct violates the antitrust exemption that the schools were given by the federal government, the suit argues. The lawsuit separates the 16 schools into two groups: nine which are explicitly not adhering to the “need-blind” methodology, according to the suit, and seven (including Cornell) which are in violation of the antitrust exemption for claiming it while the other schools are actively violating it.
In short, the suit does not directly allege that Cornell has actually engaged in preferential treatment for students who won’t need financial aid to afford tuition. It does, though, charge that Cornell is “conspiring” with the other schools to maintain the collusion and “should have known” that the other nine schools were not properly using need-blind policies—a guilt by association charge, per se.
The suit states that Cornell’s undergraduate student body is made up of people with median family income of $151,600, with 10 percent of the undergrads coming from the top 1% of the country’s income distribution and 64% from the top 20%, far outweighing the percentage that comes from the bottom 20%. It cites the New York Times as the source for these numbers.
“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.”