Federal Financial Aid Class Action Lawsuit Accuses Top Universities of Price Fixing

Federal law allows schools to collaborate on their formulas for determining the amount of financial aid to award students, but they are not allowed to consider an applicant’s need for aid when determining whether to accept their application to become a student. A recent class-action lawsuit against 16 major U.S. universities alleges that, not only were the universities collaborating on their financial aid formulas, but that they did so in order to fix their prices, and that their actions unfairly limited the financial aid students were able to receive. The federal lawsuit also alleges that the defendants do factor an applicant’s need for aid in their admissions decisions and is therefore claiming they should not be eligible for the antitrust exemption.

Not only did this allegedly cheat undergraduate applicants out of financial aid, but if the allegations are true, they also would have made it more difficult for underprivileged candidates to gain admission to the universities.

The lawsuit is seeking a permanent injunction against the schools’ ability to collaborate on financial aid formulas, as well as damages to five former students who attended some of the schools.

But the five named plaintiffs are just the tip of the iceberg. The financial aid lawsuit currently names 16 of the biggest universities in the U.S. as defendants, including Georgetown University, Northwestern University, and Yale University. With so many schools listed as defendants in the federal financial aid lawsuit, the attorneys representing the plaintiffs think more than 170,000 undergraduate students who received at least partial financial aid from those schools over the past 18 years could be eligible to participate in the federal class-action lawsuit.

The current financial aid lawsuit is just one example of the ways in which the traditional model of higher education in this country is being challenged. The Supreme Court is also considering whether to hear two affirmative action lawsuits, one involving the University of North Carolina at Chapel Hill and the other suing Harvard University.

Another long-standing tradition of the college admissions process is to give preference to legacy students – students whose parents attended the school. The practice favors wealthy students and makes it harder for underprivileged students to pursue higher education, which is why Amherst College announced last year that it would put an end to the practice in its admissions process. The announcement made Amherst College one of the first elite schools in the country to end its legacy program.

Thousands of colleges across the country have also made tests, such as the SAT and ACT, optional for admissions to their programs, largely due to the fact that the pandemic made it difficult for students to take the tests. While it may have started out as a one-time offer, hundreds of schools have extended the offer for a few more years. Depending on how things go, test-optional policies might become the norm for students applying to college.

With three offices across Chicagoland, including Chicago, Elmhurst and Wilmette, we can offer Class Action experience and expertise that is also convenient. We have faced and successfully prevailed in a number of different class action matters for a diverse range of companies, institutions and organizations. Let’s sit down and discuss your legal challenges and litigation opportunities during a FREE consultation. Call us at 630-333-0333 or contact us via our website by clicking here. We look forward to speaking with you.

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