FOCUS: Breaking the trust Sidebar

A federal judge's recent ruling that the Ivy Overlap Group's practices amounted to illegal price-fixing raises an important question about the schools' liability to students. If the schools did in fact restrain trade by conspiring to fix financial aid packages, are students who paid illegally high prices now entitled to any monetary compensation? Maybe. Because each student would have been affected by no more than several thousand dollars, those students would have to band together and file a class-action lawsuit to make it worth the legal costs, higher education administrators and legal experts said last week. A Wesleyan University student filed such a suit in New York more than two years ago, but a judge recently threw out the case because of a procedural technicality. According to University Assistant Law Professor Edward Rock, who specializes in antitrust matters, any additional class-action suits would face a number of difficult hurdles. "The problem here is that you cannot define the class as everyone who applied for financial aid because some of the people benefited from the Ivy Overlap Agreement and some of them were injured," Rock said. "The more attractive students got less [than they might have]," he continued. "But by the same token, that meant the university had more money to spread around [to needier students]. So you couldn't define the class as everyone who applied for financial aid." Besides trouble with the class definition, Rock said a suit would have a hard time measuring damages, because each student deserved and was offered a different amount of aid from the schools. Rock said students might be discouraged from pursuing the suit because the award would not be very large due to the relatively small number of affected students. He said a class-action suit seeking damages for tuition-fixing -- if that were an issue -- would be easier to argue because the class would include all university students, damages would be more easily proven and the total damage award would be considerably higher. But Judge Louis Bechtle's ruling against the Massachusetts Institute of Technology this summer means a class-action suit -- against MIT at least -- would have better odds of winning on the question of financial aid practices, Rock said. "As a practical matter, the fact that the government prevailed makes it slightly easier for a private person to prevail because there is a presumption [of guilt]," he said. But he said that does not apply to the other Ivy League schools, including the University, because they abandoned Ivy Overlap before the government filed suit and were therefore not specifically on trial.

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