The United States Department of Justice filed a statement of interest in a lawsuit accusing Penn and 16 other elite universities of illegally collaborating on financial aid calculation methods.
The July 7 statement from the DOJ refutes claims of innocence made by the accused universities in hopes of the dismissal of the case.
Penn and the other universities were first sued in January for alleged illegal financial aid practices. The lawsuit claimed that the universities artificially increased tuition costs in their financial aid calculations and that 9 of the 16 universities, including Penn, do not truly adhere to need-blind admission practices.
All of the accused universities are members of the 568 Presidents Group, which was founded in 1998 to develop financial aid practices with the goal of bringing “equity to the process of assessing each family's ability to pay for college.” In 2003, these universities adopted the Consensus Methodology of determining net price for tuition. This method requires that families pay the maximum amount that they are capable of paying in order to eliminate price competition.
In April, these universities filed to dismiss the lawsuit, stating that their actions were protected under a law exemption and thus did not violate the Sherman Act — an antitrust law that outlawed price fixing.
The exemption — found in Section 568 of the 1994 Improving America’s Schools Act — allows for financial aid collaboration between universities as long as all the institutions involved practice need-blind admissions policies. The defendants also argued that the exemption protects schools or “unwitting conspirators” who did not have any knowledge that other member schools were not completely need-blind.
The DOJ’s statement addresses two main issues in the universities’ defense. They claim that the 568 exemption doesn’t apply to partnerships between schools that do not consider financial need in admission practices and schools that do. Furthermore, the DOJ states that the protection of “unwitting conspirators” through the exemption “stretches [it] beyond its text.” Because the exemption was invalid in the universities’ case, their actions violated the Sherman Act.
Other defendants in the lawsuit are Brown, Caltech, UChicago, Columbia, Cornell, Dartmouth, Duke, Emory, Georgetown, Johns Hopkins, MIT, Northwestern, Notre Dame, Rice, Vanderbilt, and Yale.
A hearing on the universities’ joint motion to dismiss the suit took place on Aug. 2.
Penn's University spokesperson Ron Ozio wrote in an email to The Daily Pennsylvanian that the University does not comment on pending litigation.