College sued for allegedly conspiring to reduce financial aid offers

Dartmouth, along with 15 other colleges and universities, was accused of violating federal antitrust laws by allegedly not maintaining need-blind admissions processes.

by Andrew Sasser | 1/12/22 5:00am

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by Jason Romero / The Dartmouth

A lawsuit filed Sunday claims that Dartmouth and 15 other universities violated federal antitrust law by illegally colluding on financial aid policies through the 568 Presidents group, a consortium intended to standardize financial aid practices. According to the suit, these universities created a “price-fixing cartel” through the group in an effort to reduce financial aid, “artificially inflating” the price of attendance. 

According to the complaint, the 16 universities claimed to be exempt from antitrust laws under Section 568 of the Improving America’s Schools Act of 1994, which allows for two or more institutions of higher education to collaborate on financial aid policies only if all collaborators practice need-blind admissions. The suit alleges that because nine of the universities, including Dartmouth, “systematically favored” wealthy applicants in the admissions process, universities in the 568 Presidents group cannot be exempt from antitrust laws under Section 568. 

While the undergraduate admissions office states on its website that the College considers applications without regard to “financial need” for all U.S. applicants, the suit argues that this definition does not comply with Section 568, as the law more broadly defines a need-blind basis to exclude consideration of the student’s “financial circumstances.” 

The plaintiffs claim that Dartmouth does not meet this requirement due to its practice of enrollment management, which refers to the “systematic integration” of admissions, financial aid and student retention to “shape enrollment.” They also allege that the practice of enrollment management allows colleges and universities to favor wealthy students and limit the total amount of financial aid. 

Citing blog posts from businessman and blogger Joe Asch ’79, who died in 2018, the suit alleges that at Dartmouth, up to 50 applicants per year are considered through a “special process” whereby admissions staff meet with members of the development office to review a list of prospective wealthy applicants. The plaintiffs claim that most applicants considered through this process are ultimately admitted.

As an example of Dartmouth “courting” wealthy donors, the suit alleges that in 2014, former CEO of Sony Pictures Entertainment Michael Lynton received a “solicitous” email from former Dartmouth director of special projects and reporting Jeff Sassorassi ’75, who at the time worked as a “liaison” between the development and admissions offices. Sassorassi had offered to give a personal tour of campus to Lynton and his daughter, then a prospective student. The suit further claims that the email — published on WikiLeaks as part of the 2014 Sony Pictures hack — indicated that Lynton’s daughter was being “recruited” to Dartmouth by former trustee and major donor Leon Black ’73. 

In addition to systematically favoring wealthy applicants, the suit alleges that the 568 Presidents Group, which Dartmouth joined in 2004, has suppressed financial aid awards through the use of a “consensus methodology” — a common formula used to determine net price that depends “substantially” on an applicant’s ability to pay. The suit further claims that Dartmouth, along with other universities, “consistently omitted” the use of the consensus methodology in public statements explaining rising tuition prices.

According to a press release from 568Cartel.com — a website sponsored by the four law firms representing the plaintiffs in the case — more than 170,000 students from working and middle-class families were harmed by “overcharging” from the “price fixing” behaviors of the members of the 568 Presidents Group. 

In addition to Dartmouth, Brown University, the California Institute of Technology, Columbia University, Cornell University, Duke University, Emory University, Georgetown University, the Massachusetts Institute of Technology, Northwestern University, Rice University, the University of Chicago, the University of Notre Dame, the University of Pennsylvania, Vanderbilt University and Yale University were named as defendants in the lawsuit. 

College spokesperson Diana Lawrence declined to comment on the case, citing its nature as an “ongoing” legal matter. Brazer Communications — a marketing firm representing the plaintiffs’ law firms, Roche Freedman, Gilbert Litigators & Counselors, Berger Montague and FeganScott —  also declined to comment.

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