Top Universities Illegally Collude To Limit Financial Aid, Lawsuit Alleges

Second high-profile legal challenge to hit Yale in three months

Yale protesters opposed to Brent Kavanaugh / Getty Images
January 11, 2022

Top universities, including Yale, Columbia, and the University of Chicago, illegally colluded to limit financial aid to students, a lawsuit filed on Sunday alleges.

The schools use a shared methodology to calculate applicants' financial need, which is then used to determine their aid package. Federal law lets schools collaborate on these formulas, but only if they do not consider financial need in admissions decisions. The lawsuit alleges that they do consider it, and thus that the antitrust exemption shouldn't apply.

The plaintiffs in the suit are former students from the universities who say they were unfairly denied aid. Defendants named in the suit include Georgetown University, Brown University, Northwestern University, the University of Pennsylvania, Cornell University, Dartmouth College, and the Massachusetts Institute of Technology. All told, 16 universities could be forced to pay damages.

The suit alleges that the schools consider financial need by giving the children of wealthy donors a leg up. It comes as universities across the country are reevaluating their admissions policies, with some, including Harvard, going so far as to make standardized tests optional.

The suit is also the second high-profile legal challenge to hit Yale in three months. In November, a lawsuit was filed against three administrators at Yale Law School—Dean Heather Gerken, Associate Dean Ellen Cosgrove, and Director of Diversity Yaseen Eldik—alleging that they "worked together in an attempt to blackball two students of color from job opportunities as retaliation" for refusing to make false accusations against Amy Chua, a Yale Law professor widely perceived to be a thorn in the administration's side.

Those same administrators were the subject of a different, unrelated controversy in October, when they pressured a Native-American law student to apologize for inviting classmates to his "traphouse."

A Yale spokeswoman told the Wall Street Journal that the school’s financial aid policy is  "100 percent compliant with all applicable laws." Most of the other schools named in the antitrust lawsuit declined to comment.