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Day Hall, which houses the Cornell financial aid office.

ITHACA, NY -- Cornell University was one of 16 universities named as defendants in a lawsuit filed in federal court for allegedly conspiring to eliminate competitive financial aid offers to students in a price fixing scheme.

Other universities named are Brown University, California Institute of Technology, University of Chicago, Columbia University, Dartmouth College, Duke University, Emory University, Georgetown University, Massachusetts Institute of Technology, Northwestern University, University of Notre Dame, University of Pennsylvania, Rice University, Vanderbilt University and Yale University.

The lawsuit alleges that the universities are in violation of section one of the Sherman Act. Enacted in 1890, the Sherman Act is the country’s primary federal antitrust statute. Section one “broadly prohibits agreements between distinct actors that unreasonably restrain trade” and provides “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce of several states, or with foreign nations, is declared to be illegal,” according to the American Bar Association.

The lawsuit names the plaintiffs as Sia Henry, Michael Maerlander, Brandon Piyevsky, Kara Saffrin and Brittany Tatiana Weaver. Henry attended Duke, Maerlander attended Vanderbilt, Piyevski attended Northwestern, Saffrin attended Northwestern and Weaver attended Vanderbilt. The plaintiffs allege the universities “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.”

According to the plaintiffs, the defendants claim they are protected by section 568 of the Improving America’s Schools Act of 1994, which is an exemption from the antitrust laws which prohibit conspiracies among competitors. It applies to two or more institutions of higher education at which “all students admitted are admitted on a need-blind basis.”

The lawsuit says need-blind basis means without regard to the financial circumstances of the student involved or the student’s family, however the plaintiffs claim the defendants are not entitled to that exemption because “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.” They go on to allege that all named defendants have conspired to reduce the amount of financial aid they provide to admitted students. This conspiracy, which has existed (with slightly varying membership) for many years, thus falls outside the exemption from the antitrust laws.”

The plaintiffs allege the defendants are members of the 568 Presidents Group, in which the members have agreed on a set of common standards for determining a family’s ability to pay for college, called the Consensus Methodology. “Under the Consensus Methodology, an applicant’s ability to pay is a substantial determinant of the net price, which is the institution’s gross tuition plus fees for room and board, less institutional grant aid, charged to the applicant for attendance.”

Allegedly, the members of the 568 Presidents Group met regularly to jointly implement the methodology, artificially inflating the net price of attendance for financial-aid recipients. The lawsuit claims over 170,000 financial aid recipients have been overcharged by “at least hundreds of millions of dollars” over the past two decades.

Columbia, Dartmouth, Duke, Georgetown, MIT, Northwestern, Notre Dame and Vanderbilt are alleged to have been members of the Presidents Group the entire time, while Cornell, Brown, CalTech, Chicago, Emory, Rice and Yale are alleged to have been part of it during at least parts of the last two decades.

“These seven defendants may or may not have adhered to need-blind admissions policies, but they nonetheless conspired with the other defendants. The 568 exemption thus does not apply to them either,” the lawsuit alleges. This means Cornell may or may not have been directly partaking in the allegations, but the plaintiffs do claim they were involved in the conspiracy.

Cornell declined to comment. The suit is demanding damages for the plaintiffs and “all others similarly situated,” as well as an end to the alleged collusion.

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