The day I received an email from a lawyer claiming to be one of the lead counsel in a lawsuit Emory University was involved in, I thought it was a scam. Our Editorial Board had just written about Emory’s alleged involvement in the 568 Presidents Group, a cartel which created the “Consensus Methodology” to price fix and limit financial aid for students. A commitment to price fixing is an agreement among competitors — in this case, universities for student enrollment — to collectively determine how much to raise, lower or maintain prices. As a result, this practice raises the price of enrollment and causes higher education to cost more money.
By confiding in one another, the misconduct of this organization limits upward mobility and burdens low-income families with extra costs that prevent them from further success. Higher institutions may claim to welcome socioeconomic diversity, but the data representing economic segregation doesn’t lie. 6% of Emory students come from the bottom 20%, which is considered a high percentage compared to other elite universities. Calling this just another lawsuit, diminishing it to “routine capitalism” discounts the magnitude of the case and the precedent it sets for the future.
The legal brief was brought by nine plaintiffs on Jan. 9. In response, all 17 defendants, including Emory University filed a joint motion to dismiss, citing the universities as “exempt from challenge under the antitrust laws.” Select schools like Yale University (Conn.) and Johns Hopkins (Md.) also filed individual motions. According to the 568 Exemption in antitrust law, universities may standardize financial aid practices, so long as every student is admitted on a need-blind basis.
However, the plaintiffs assert that the defendants do not abide by the statutory definition of “need-blind” which is that they must “admit all students without regard to their financial circumstances.” Allowing children of donors to be prioritized during admissions is an act of disfavorment. Further, the uniform formula and data sharing among universities within the cartel eliminates price competition, a crude violation of the Sherman Act.
The motion to dismiss is a four-pronged defense: first, they disagree on the notion of need-blind, claiming the violation of the Exemption only applies if a student needing financial aid is overtly disfavored. Second, the universities defend price fixing as a procompetitive behavior, a phenomenon that attracts competitors in the market. Effectively, it means colleges have to fight for students by implementing higher financial aid packages, rather than giving out the same calculated prices. Third, the effects of price fixing are purely speculative. Finally, while the plaintiffs ask for compensation from the universities for all students affected by the cartel, the defense invokes the four-year statute of limitations and claims the case should only apply to students from 2018 to the present.
Furthermore, a statement issued by the U.S. Department of Justice suggesting multiple legal errors in the interpretation by the defendants further demonstrates support for the plaintiffs’ case. The definition of need-blind as given by the defense does not align with the legal interpretation widely accepted under U.S. law. Additionally, under Section 1 of the Sherman Act, any sort of trade or conspiracy to restrict competition is considered illegal and can be determined by rule of reason or per se, which the Department of Justice believes the plaintiffs adequately provided evidence for this claim.
The outcome could cost billions of dollars in losses for the universities. Lawyers involved in the case estimate more than 200,000 students have had their financial aid packages reduced by between $10,000 and $20,000; violations of antitrust law automatically triple the total value of compensation. But even then, the loss would barely make a dent in the total university endowment.
With the U.S. District Court Judge Matthew F. Kennelly ruling in favor of the plaintiffs on Aug. 15 and denying the defendants their motion to dismiss in its entirety, the defendants will likely find themselves answering to taller orders as the case moves forward.
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This lawsuit, perhaps the most prominent case since the Varsity Blues scandal in 2019, among other things, exemplifies the commercialization of higher education. Institutions are turning into profit- and PR-hungry machines, calling into question their integrity, their dedication and ultimate purpose in serving all students.
Foremost, the U.S. continues to maintain a strong reputation for its teaching quality around the world. But universities are falling short on their goal of accessible education regardless of socioeconomic status. Our schools focus more on the tangible bling of new research centers and commercial growth to attract prestige, rather than putting effort into making sure all students who want an education are able to receive and afford one. Higher education institutions might pride themselves on “excellence,” but now it’s a term as meaningless as diet water.
Universities’ obsession with wealth and prestige is further demonstrated by Exhibit F, filed by plaintiffs in June 2022, which calculates just how much students were cheated out of an affordable education.
“The table … illustrates that by devoting just 2% per year of the unrestricted funds in their extraordinarily large and successful endowments to scholarship aid, nine of the defendants could give every aid recipient a completely free four-year education, and the other eight could give every aid recipient another $12,000 per year (on average) in scholarship funds — all while still growing their endowments,” said Robert Gilbert, Managing Partner of Gilbert Litigators and Counselors, one of the lead lawyers for the plaintiffs.
Specifically, at Emory, each of the 3,307 students on financial aid would be able to receive an additional $14,256 of funds per year, the defendants allege. This is approximately 19% of our annual cost of attendance, not just a figure to brush away. To offer a little more perspective: the poverty line for a family of four was set at $25,100 in January 2018. For low-income students, the additional money would count for over half of their family’s annual income.
Because tuition costs continue to play a role in the declining college enrollment, any effort a college can make to lessen the gap of education inequality is crucial, especially in promoting widespread accessibility to education. Endowments of each university from 1994 to 2021 have skyrocketed at least 300%; Emory’s endowment went from $1.6 billion to $8 billion. In total, however, the endowment had only distributed more than $342 million toward scholarships and research in 2021, which only accounts for 3.1% of the total endowment and 17% of their unrestricted endowment spendings.
Asking for transparency to know where all this money is going is the bare minimum. While specific endowments from donors are restricted in their usage, unrestricted endowment can be used to support students. So where is the rest of the unrestricted endowment going?
“One direct result [of the cartel] is that scholarship applicants receive scholarships smaller than they would receive in the absence of collusion by the universities,” said Gilbert in an interview with The Wheel. Effectively, every school would only lose 2% of their ever-growing endowment to pay for student education. How tragic. I pity the school who probably couldn’t tell the difference if 2% of their money just left the bank account the next day.
For individual students, compensation from the university could be life changing — for some , it could make the difference of being able to graduate debt free. Universities wouldn’t see any difference, but still choose to spend their time and money shelling out millions of dollars to fight this lawsuit. In an interview with The Wheel, Gilbert explained how in theory, the defense lawyers who are paid by the hour would prefer to drag the case, understating the risks to earn more money and be less incentivized to settle. While it’s only a speculation, the underlying logic makes complete sense. The defense argument is not foolproof and has been broken apart by the Department of Justice more than once. Partners at Jones Day, the law firm representing Emory, earned over $1 million per partner in 2021; their hourly rates have been calculated to be around $950. While financial incentives are not a significant driver for holding out the case, but undeniably plays a role in how people may act, less motivated to settle the case. For a cartel of organizations who claim they’re dedicated to building the students of the future, they’re failing spectacularly.
Unfortunately, money is complex and never a clear cut issue when it comes to many different interest groups. Certainly, it would be near impossible for universities to not take into account family finances. But claiming to be need-blind and favoring wealthy students so long as they do not disfavor low-income students is inherently hypocritical. It’s inane – the simple act of favoring one group is disfavoring another.
The ramifications extend far beyond the plaintiffs – according to both Gilbert and Professor Robert Lande, Venable Professor of Law at the University of Baltimore School of Law, the case only applies to domestic students. Those who are unaffected, such as international students, struggle to obtain financial aid as well. While studying in the U.S. for students living abroad is often considered an incredible opportunity, as many consider it a life-changing move that will open doors to their future, they can onlyreceive limited need-based financial aid. Such a policy leaves them at an inherent disadvantage, giving universities a loophole: now they can accept students whose parents are among the richest 1% in a foreign country. Nothing is stopping them.The lawsuit exposes the unfair assumptions we make about international students – not all of them can afford the full tuition, and the lack of financial support only further exacerbates their chances at accessing higher education. Should they receive scholarship awards, they must also maintain high academic achievement, or put their aid in jeopardy.
Technology like enrollment management software further jeopardizes the integrity of college admissions. By simply inputting a student’s zip code, their parents’ professions and other identifying information offered on their college application, admissions teams can calculate a rough estimate on how much parents can contribute to tuition and the likelihood of enrollment. While budget allocation is important to consider, enrollment algorithms are created to help colleges determine the least amount of aid they can allocate to students while still meeting their goals.
The unfair prioritization of wealthy students may be further incentivized because schools will stop at nothing to boost their rankings. Today, college rankings unfortunately matter more than anything else. A melange of factors – from endowment size to selectivity to academic reputation – are calculated and analyzed. It becomes a race to the top, with colleges using promotional gimmicks to entice students to enroll and being picky with arbitrary standards in order to uphold their prestige. Such selectivity – even in the vaguest most illogical sense is elitism, and education is pushed into the background.
School marketing is a coveted skill, and merit-based scholarships are the trophies awarded to select students who can become an institution’s new poster child. But here’s the thing: I’ve toured 34 schools and attended all their information sessions across the U.S. All rank in the top 50 and most in the top 20. The marketing strategies are so similar, I started losing track of all the differences by number five. If I could get in, graduating from all of these schools with the same bachelor’s degree is only differentiated by its name and intangible place in the social hierarchy. Ivy League schools are attractive because it’s almost a crap shoot to get in – and once you do, it follows you on your resume forever. Even not knowing someone, there’s an instantaneous reaction of respect and occasionally thinly veiled jealousy in our society when you hear that they graduated from Harvard.
Education is offered as a commodity. Institutions are no better than corporations, seeking to increase revenue and install state-of-the-art technology and machines where only students of a certain socioeconomic status can access them. It’s proof of how knowledge is increasingly unattainable. Commercial ventures for merchandise and research facilities promote a university or a professor’s growth in numerical rankings and academic circles. Yet for students, the ability to be educated is masked behind an even taller and ever-growing wall: only those with enough money and accumulated prestige can break through.
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The purpose of education can’t be summed up in one sentence. But throughout history, one of education’s core goals is indisputably to build people capable of learning and critical thinking, promote intellectual achievement and compete on a global scale. Due to the lack of transparency from colleges and universities, students remain woefully unaware of the opportunities being taken away from them.
Access to education is one of the most effective ways to move up the social hierarchy. When high-income students dominate college enrollment levels, the adjacent development of college culture, social background and lived experiences become identical – and suddenly everyone is a raging upper-class liberal who doesn’t actually understand the difference between socialism and capitalism.
Low-income students don’t always choose not to attend school, they deserve an equitable and affordable education. If someone wants to learn, educational institutions are responsible for providing it, not coming up with excuses to restrict a student’s potential.
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In multiple email exchanges to the Emory administration, Laura Diamond, Assistant Vice President in University Communications said, “Emory University thinks this lawsuit has no merit and we will fight this litigation.”
I find it almost laughable that Emory is choosing to “fight the litigation,” considering I’m not even sure what they are fighting. Emory may have allegedly left the cartel in 2012, but removing their name from the cartel’s website does not mean they haven’t hurt students in the past. In fact, the dismissal of the motion to dismiss clearly explains that like a criminal case, Emory has the burden of proof in showing their complete withdrawal from the cartel. So if the lawsuit truly has no merit and Emory believes it has done nothing wrong, they should have no difficulty proving it.
“The law is clear,” said Gilbert, “unless and until Emory publicly disavows the 568 Cartel and its purposes, Emory remains a member of the price-fixing conspiracy. In fact, under settled law, Emory is liable to students and their families not only for current ongoing overcharges of the entire Cartel, but for damages going back to 2003.”
The unfolding of this case has been tragic and disappointing. Being right in a court of law and saving face should not take precedence over accessibility of education. Roughly estimating, the total amount of lost financial aid could reach more than $4 billion. If a university is truly committed to upholding academic excellence and wants to brag about welcoming all types of diversity without lying – prove it.
Sophia Ling (24C) is from Carmel, Indiana.
