Penn is among six universities yet to settle an antitrust lawsuit over financial aid which could expose defendants to approximately $2 billion in damages.
The ongoing 2022 case accuses Penn and 16 other universities of forming a “price-fixing cartel” that colluded to decrease financial aid and benefit wealthy students. This information sharing, the defendants claimed, decreased the financial aid awarded to around 200,000 students over a 20-year period and overcharged them by 685 million dollars through illegal price-fixing practices.
If found in violation of antitrust laws, Penn and the five other original defendants, the Massachusetts Institute of Technology, Notre Dame University, Cornell University, Johns Hopkins University, and Caltech University, will be responsible for approximately two billion dollars in damages.
A University spokesperson wrote in a statement to The Daily Pennsylvanian that Penn “continues to see no merit in this lawsuit.”
“By pointing to manipulated “statistics” and misquoting snippets of testimony void of context, the defendants have drawn false conclusions seeking to embarrass the University,” the spokesperson wrote. “The actual evidence in the case makes clear that Penn does not favor admitting students whose families have made or pledged donations to Penn, whatever the amount.”
The suit alleged that elite universities, joined together as members of the 568 Presidents Group — a group of American universities and colleges practicing need-blind admissions — exchanged “methodology” and “principles” for calculating financial aid. In the 13 years that Penn was a member of the 568 Group, its endowment increased from around 3.5 billion dollars to 14.9 billion dollars.
Penn left the group in 2020, citing the University’s need for more flexibility in offering financial aid awards to students. Since then, Penn’s financial aid policies have expanded. In November of 2024 Penn announced that beginning in 2025, it would no longer consider home the value of the primary family home in determining financial aid eligibility, a departure from the methodology used by the 568 Group.
This is not the first time Penn has been involved in a price-fixing lawsuit. In 1991, Penn and the seven other Ivy League institutions settled a suit with the Department of Justice, which discovered the eight universities were colluding to provide financial aid offers. The Ivy League rationalized their practices by claiming that the universities would not be able to afford need-based financial aid if they had to compete with other elite universities.
MIT — the only non-Ivy League university to be named in the DOJ suit — settled the suit in 1994 and subsequently created an antitrust exemption for elite universities. The exception permitted Penn and other universities to collaborate on financial aid methodologies, provided that all students were admitted on a need-blind basis.
An additional motion filed on Dec. 16 added that Penn, along with the other universities in the suit, continued to give preferences to wealthy students while claiming to be need-blind. The motion argued that this additional consideration for students based on factors such as wealth and donation history rendered the 1994 exception invalid.
Former Penn Associate Dean of Admissions Sara Harberson testified in 2023 that students with wealthy families or connections to the board were tagged with a unique label and were admitted “almost 100 percent of the time,” according to recent court filings. Harberson added that “even if the student was incredibly weak” the admissions office had no power to deny the student’s application.
The same court documents show that in 2019, the admission rate for students with this tag was 73.18% versus 7.14% for students without special interest designations. Similar disparities in admission rates occurred in the period during which Penn claimed to be need-blind as a member of the 568 Group.
The Dec. 16 motion also alleged that the universities could have increased financial aid awards by 10-20% each year from unrestricted endowment funds, and had little to no effect on the rate of increase of their endowments.
Penn was among 40 elite universities named in a separate price-fixing lawsuit in October of 2024 which alleged that it withheld funding from students by considering the incomes of noncustodial parents when determining financial aid packages.
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