Top Private Universities Accused of Financial Aid Conspiracy (2)

College Board, a nonprofit behind college admissions programs, and 40 private universities face a proposed class action accusing them of a scheme tied to financial aid that violates US antitrust law and exacerbates student debt.

The complaint, filed Monday in the US District Court for the Northern District of Illinois, targets an alleged effort by College Board to require schools to consider the income and assets of “noncustodial parents” when making determinations on nonfederal financial aid.

Leaders from such institutions as Harvard University and Northwestern University agreed to adopt the collective aid strategy, which interfered with the competitive process and unlawfully inflated the net price of the schools’ tuition, according to the complaint.

A Boston University student and an alum of Cornell University brought the case, which seeks to represent a class of students who had a noncustodial parent whose financial information was used as a factor in the amount of aid awarded. Their lawsuit cites a variety of statistics on the ballooning price of college in recent decades, while adding that defendants’ conduct “has only made matters worse.”

The two are represented by Hagens Berman Sobol Shapiro LLP, a plaintiffs’ firm that spearheaded antitrust claims from college athletes over pay relating to their name, image, and likeness.

“We are confident that we will prevail in this action,” a College Board spokesperson said. Hagens Berman didn’t immediately return a request for comment.

Noncustodial parents are defined by College Board as parents who did not live with the student “most of the time during the past year.” College Board in 2006 started pushing schools to add their financial assets to students’ nonfederal financial aid financial applications, the lawsuit says, a move affecting a substantial portion of applicants.

The federal government’s methodology for student aid doesn’t include that criterion.

“For a significant minority of students (those from single-parent families),” the 2006 change “essentially at least doubled their available parental assets/income practically overnight,” the lawsuit says.

Eileen Chang, a named plaintiff who graduated from Cornell University in 2021, said that her noncustodial parent’s income worked to her disadvantage. The parent, who had a much higher income than her custodial parent, was on disability and unable to contribute, yet Cornell told her “noncustodial parents are expected to help pay tuition,” the lawsuit said.

Cornell declined to comment. Harvard, Northwestern, and Boston universities didn’t immediately respond to comment requests.

The College Board and the universities are accused of participating in a conspiracy to reduce the amount of financial aid offered to a subset of students in violation of the Sherman Act. The complaint claims to target a market defined as the 50 highest-ranked private universities, per US News & World Report over the past 15 years.

The average net price of school at the 40 universities targeted in the lawsuit is $6,200 higher than the 10 other private universities that don’t require noncustodial parent financial data, according to the lawsuit.

The case is Hansen v. Nw. Univ., N.D. Ill., 1:24-cv-09667, 10/7/24.