Elite schools accused of financial aid scheme that saw students overpay by $685M

A lawsuit is accusing a number of the country's leading universities of overcharging students to the tune of $685 million in a “price-fixing” scheme.

The Washington Post reported a list of top schools the lawsuit claims colluded to limit the amount of financial aid paid to lower-income students.

The Post specifically cited accusations against Georgetown University. The lawsuit claims the school president compiles a list of about 80 applicants he wants accepted regardless of transcripts, recommendations, test scores or personal essays.

Almost all applicants were accepted purely based on their parents' wealth and past donations, the lawsuit claimed.

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"Documents and testimony from officials at Georgetown, the University of Notre Dame, the University of Pennsylvania, MIT and other elite schools suggest they appeared to favor wealthy applicants despite their stated policy of accepting students without regard for their financial circumstances," said the Post, citing the lawsuit.

A policy called "need-blind" is designed to protect applicants who might require financial aid. Federal laws allow schools to see a student's financial information for planning purposes, but "need-blind" prohibits it being used for admission decisions.

The plaintiffs in the case claim that the schools used the information for acceptance offers. They also allege that the schools intentionally limited financial aid packages.

"A coalition of highly selective universities, formed in the late 1990s and known as the 568 Presidents Group, collaborated on aid formulas under a 1994 federal antitrust exemption," the report said. "The exemption applied only if schools engaged in need-blind admissions."

There are 17 "elite" institutions named in the lawsuit, most from Ivy Leagues.

While the students are seeking damages of $685 million, under U.S. antitrust laws, that amount would automatically triple to $2 billion.

The universities have sought to have the cases dismissed, saying they've spent millions in financial aid on students.

Read the full report here.