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Rice and 15 other universities accused of conspiring to limit financial aid

A federal lawsuit accuses Rice University of engaging in price-fixing in collaboration with other prestigious private schools across the country.

HOUSTON — A federal lawsuit filed in Illinois over the weekend accuses 16 private universities — including Rice University in Houston — of using a shared formula to calculate the financial needs of student applicants in a way that unfairly limits aid to students who need it.

The lawsuit's plaintiffs are five former students from some of those schools who say the universities are violating antitrust laws, which prohibit competitors from conspiring to set prices.

A Rice University spokesperson declined to comment on the pending lawsuit.

KHOU 11 reporter Melissa Correa is following this story and will have more updates on KHOU 11 News at 4 and 5 p.m.

The suit claims that by limiting financial aid, this group of schools engaged in price-fixing, reducing competition and inflating the cost of attendance for those who receive financial aid. The plaintiffs calculated that the scheme affects more than 170,000 financial aid recipients at a cost running into the hundreds of millions of dollars.

“In critical respects, elite, private universities like Defendants are gatekeepers to the American Dream,” the lawsuit states. “Defendants’ misconduct is therefore particularly egregious because it has narrowed a critical pathway to upward mobility that admission to their institutions represents.”

Universities that do not take into account a student’s financial aid, known as a "need-blind policy," are allowed to collaborate on guidelines to assess a candidate’s financial need, as part of an exemption of antitrust laws provided by Congress in 1994.

The schools are known collectively as the “568 Presidents Group.” It was named after Section 568 of the law that allowed them to discuss the guidelines for financial aid.

According to the complaint, Rice joined the group in 1998 and implemented the methodology in 2003. The school then left but rejoined again in 2017.

The remaining 15 schools mentioned in the lawsuit include: 

  • Brown University
  • California Institute of Technology
  • University of Chicago
  • Columbia University
  • Cornell University
  • Dartmouth College
  • Duke University
  • Emory University
  • Georgetown University
  • Massachusetts Institute of Technology
  • Northwestern University
  • University of Notre Dame Du Lac
  • University of Pennsylvania 
  • Vanderbilt University 
  • Yale University

The lawsuit asks for a permanent end to the collaboration among the schools, as well as damages.

The antitrust exemption is set to expire at the end of September unless Congress renews it.

This story was originally published at TexasTribune.orgThe Texas Tribune is a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

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