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- Forty elite colleges are targeted in a new lawsuit accusing them of colluding to increase tuition.
- The lawsuit claims the schools are factoring in the incomes of divorced parents, even if one of the parents cannot contribute.
- This has led to students paying about $6,200 more than necessary, the lawsuit said.
Forty elite colleges are facing legal action over accusations they conspired to raise tuition — primarily by targeting students with divorced parents.
Law firm Hagens Berman filed a class-action lawsuit earlier this week on behalf of plaintiffs Maxwell Hansen and Eileen Chang, former students of Boston University and Cornell University, respectively. The lawsuit targets a form known as the CSS profile — administered by the College Board — that some schools use to determine how much financial aid a student will get.
The lawsuit accused the College Board of an “intentional push” that began in 2006 to require the 40 schools named in the case to consider the incomes of divorced or separated parents when making financial aid decisions. This enabled schools to produce higher estimates of what a family can afford to pay for tuition than what might actually be feasible.
According to the lawsuit, considering income of divorced parents raised the average tuition price for students by about $6,200.
“Students were told there were no exceptions to the requirement – even if a divorce court order was issued concerning college expenses,” the lawsuit said. “Formulas are then used to generate a financial aid offer. The student then ultimately receives an estimate for the family contribution based on what the two parents can contribute, regardless of whether both parents do actually contribute.”
The College Board told Business Insider in a statement that it “has just received this legal action and are reviewing it, but we are confident that we will prevail in this action.”
Cornell University and Columbia University declined to comment on pending litigation. Boston University and the other Ivy League schools named in the case did not respond to a request for comment from BI on the lawsuit.
Chang, one of the plaintiffs, attended Cornell from 2017 to 2021, and she submitted the CSS profile as part of her financial aid application. While Chang’s noncustodial parent — the parent Chang did not live with — was on disability and unable to contribute to her tuition, the lawsuit said the CSS profile still evaluated Chang’s financial aid based on both of her parent’s incomes.
As a result, Chang’s custodial parent had to take out a parent PLUS student loan — the most expensive type of federal student loan with the highest interest rate — to pay for the rest of her tuition, and Chang faced “artificially high prices” to attend Cornell because she did not receive the right amount of financial aid, the lawsuit said.
The lawsuit accused the participating schools of anti-competitive behavior, saying that they “have substantial endowments and the proven capacity to meet the financial needs of their students without reducing their endowments (if that were even imperative), and without colluding to artificially reduce financial aid.”
This isn’t the first time elite schools have been accused of anti-competitive behavior. In 2022, five former undergraduates of Duke, Northwestern, the University of Chicago, Yale, and Brown sued 16 schools over engaging in a “price-fixing cartel” to keep financial aid packages low. Some of those schools have agreed to settle, giving millions of dollars back to students.