A recent class action lawsuit has made serious allegations that a number of top universities colluded on financial aid awards. These are serious accusations, and they are aimed at some of the top schools in the country; every Ivy League school except Princeton, every Ivy+ school except UChicago, and dozens more universities in the top 50 schools.
We only have the allegations thus far, and the colleges have not had the chance to respond yet, but these are very serious, and the filing presents remarkable evidence for these claims. In this article we’re going to cover what exactly is being alleged, who suffered from this, and what the outcome of this lawsuit may be. We’re also going to briefly discuss how financial aid is supposed to work for divorced parents, as that is central to the matter at hand. Let’s jump right in!
How Financial Aid Works for Divorced Parents
Even if your parents are divorced, most top colleges expect both to contribute to a student’s expenses for college, even if this isn’t feasible for a variety of reasons. This is not true across the board however.
FAFSA only requires financial information from one parent in the case of divorce. The parent with more financial resources in the case of split custody, but if one parent has sole custody, only they need to report their resources. Both alimony and child support are considered among the financial resources available to you.
The CSS Profile does require information from a noncustodial parent, which is then used in calculating your aid award. Some schools do not require this information; a full list of these can be found here, but notably includes:
- UChicago
- Vanderbilt
- Oberlin
- William & Mary
- Loyola Maryland
- Georgia Tech
You may note that none of these schools are named in the lawsuit. While colleges do have a separate form you can fill out on their site in the case of extenuating circumstances, schools tend to only consider a noncustodial parent’s ability to pay, rather than their willingness.
What Does the Lawsuit Allege?
It is exactly this part of the CSS Profile that is core to the plaintiff’s lawsuit, and is the reason College Board is named amongst the parties being sued. The allegation is that by asking for information from noncustodial parents, colleges were able to inflate the presumed financial resources of the students, and therefore offer less financial aid.
They further allege that this was the result of coordinated decision-making on the part of the defendants, who acted in concert to implement these policies with the help of the CSS Profile. This collective action made the process seem more inevitable, since it wasn’t just one institution taking part in it.
As a result of the alleged price fixing, plaintiffs contend that the total cost of tuition was $6,200 more on average at these schools than at other top 50 universities which did not engage in the practice. This is a class action lawsuit, meaning that any judgment would go out to students who the court rules were impacted, if they decide in favor of the plaintiffs. In this case, that would be students who had divorced parents who received financial aid from these universities during a period determined by litigation.
For motivation, the colleges colluded because they did not want to compete with each other for students on this metric. Previously, colleges would have lower yield if they asked for financial information from a noncustodial parent, as students chose to apply to schools which did not ask. The introduction of the CSS Profile, and the increase in schools using it, allowed many top schools to act in concert when asking these financial questions, thus lowering the competitiveness of the market.
What do the Accused Colleges Say?
Most of the accused colleges have chosen to remain silent; they have policies of not commenting on ongoing legal action. Those that have commented have of course denounced the allegations as groundless, and promised that they will be exonerated over the course of the ensuing trial.
This is unsurprising; when accused of wrongdoing, very few people will immediately say: “Yep, you got me. We had a good run though didn’t we? Really had you fooled!” Even if they are responsible for these allegations, they certainly aren’t going to admit to it publicly. That is what the lawsuit is for.
We should note that this lawsuit will take time, and further details will emerge periodically through rounds of discovery and testimony. At the moment, we only have the initial filing by the plaintiffs. While this is a truly worrying allegation, we will have to wait until more evidence is revealed before we can say anything about what actually happened.
What Does This Lawsuit Mean for You?
At the moment, not much. While lawsuits can result in significant changes, in the short term, they do very little; they take a long time to wind their way through the courts, and for final judgments to be rendered. That said, there are several groups who can expect to see something from this lawsuit.
First, any major changes are predicated on the court siding with the plaintiffs. If courts side with the colleges, then the colleges will continue acting as they have, and nothing will change. This will have no impact on you, since your situation will remain the same as it was prior to the lawsuit being filed.
If the courts decide with the plaintiffs, then several groups will see impacts. First, students in the class who have graduated from college in the period discussed by the case will see some monetary return. As with all class action lawsuits, this is likely to be a small amount for each individual, regardless of how large the total judgment is for.
A more notable change will be for students with divorced parents who are actively applying for financial aid. While colleges may still ask for financial information from noncustodial parents, this case is likely to discourage it, and may even force College Board to reconfigure the CSS Profile. While the exact results remain to be seen, we predict that this will result in more generous aid offers for children with divorced parents.
Is Collusion on Financial Aid Common?
This is a difficult question to answer, because collusion is, by its very nature, a secret practice, done out of sight. We do know that this lawsuit is not the only one; earlier this year, and last year, other colleges settled a lawsuit which contended they fixed prices to limit the amount of need-based aid they awarded students. While the colleges admitted no wrongdoing, millions of dollars is now being distributed amongst parties to the lawsuit.
As for why colleges would collude on financial aid, the answer is as easy as it is boring: money. Money is at the root of all kinds of malfeasance, and while colleges do have higher aims, they are organizations like any other, run by people like anyone else, and can fall afoul of the same misdeeds that plague any other kind of institution.
The reason this draws so much attention is because of the incredible cost of college, and how unfair it feels for colleges to be adding on to these already very steep charges, especially for students in need of their assistance. This often leads colleges to settle, even if they claim no wrongdoing, simply to get the stories out of the public mind.
Overall, we don’t think actual collusion on financial aid is all that common, but many universities do keep an eye on their competitors. There’s a reason that most financial aid offers are similar, why top colleges have similar cutoffs for who gets aid, and why incredibly different schools have similar policies on aid. This isn’t any grand plan to cheat you, but the simple movements of a market self-adjusting.
Final Thoughts
College is expensive, incredibly so, and the price is only increasing each year. Any sign that this price is even steeper than it needs to be due to malfeasance understandably causes consternation, so we aren’t surprised by this latest story grabbing headlines. We’ll have to wait and see what result this case has, if any, but the worries many students have about affording college are clear.
If you’re worried about affording college, or want advice on how to apply strategically to maximize your chances of financial aid, we can help. We have long experience helping students get the most out of their education, and find the best scholarship opportunities for their needs. Schedule a free consultation today to learn more, or check out our pro bono Laurel Scholars program. We look forward to hearing from you in either case, we love helping students succeed with their educational goals.
