Hagens Berman: 40 Private Colleges and Universities Hit with Massive Class-Action Lawsuit Alleging Financial Aid Price-Fixing Through College Board

Lawsuit alleges price-fixing strategy raised the cost of college by approximately $6,200 and affects those from divorced or separated families

A class-action lawsuit filed yesterday accuses 40 of the nation’s top private colleges and universities — including MIT, NYU and Brown — and College Board of a conspiracy to increase the price of college, allegedly violating federal antitrust law and exacerbating skyrocketing student loan debt, according to law firm Hagens Berman.

The class action filed Oct. 7, 2024, in the U.S. District Court for the Northern District of Illinois alleges the higher ed institutions engaged in a concerted action to require noncustodial parents — typically the parent that the student did not live with most of the time during the past year — of applicants seeking non-federal financial aid to provide financial information. College Board then requires schools to take this sum into consideration for financial aid allotments, regardless of the parent’s actual involvement or financial assistance. Absent this agreement, the lawsuit states, schools would compete in offering financial aid to enroll top candidates.

The lawsuit says this alleged price-fixing agreement increased the cost of tuition by approximately $6,200 when compared to top schools not participating in College Board’s agreement.

“The financial burden of college cannot be overstated in today’s world, and we believe our antitrust attorneys have uncovered a major influence on the rising cost of higher education,” said Steve Berman, managing partner and cofounder of Hagens Berman. “Those affected — mostly college applicants from divorced homes — could never have foreseen that this alleged scheme was in place, and students are left receiving less financial aid than they would in a fair market.”

If you are a student or a custodial parent of a college student who received nonfederal financial aid since 2006 at one of the following colleges or universities, find out more about the College Board class-action lawsuit: California Institute of Technology, Stanford University, University of Southern California, Yale University, University of Miami, Emory University, Northwestern University, University of Notre Dame, Tulane University, Johns Hopkins University, Brandeis University, Harvard University, Massachusetts Institute of Technology, Northeastern University, Tufts University, Worcester Polytechnic Institute, Boston College, Boston University, Washington University in St. Louis, Dartmouth College, Columbia University, Cornell University, Fordham University, New York University, Syracuse University, University of Rochester, Duke University, Wake Forest University, Case Western Reserve University, Lehigh University, Carnegie Mellon University, University of Pennsylvania, Villanova University, Brown University, Baylor University, Rice University, Southern Methodist University, American University, George Washington University and Georgetown University.

The Impacts of College Board’s 2006 Changes

The lawsuit accuses College Board of an “intentional push” to require schools to consider the income and assets of noncustodial parents when making financial aid determinations. These rules require all applicants seeking financial aid to submit a CSS Profile, “an online application used by colleges and scholarship programs to award non-federal institutional aid,” and includes the requirement that all noncustodial parents provide information related to income and assets, which each school must take into consideration. This, the complaint alleges, constitutes anticompetitive behavior by forming an agreement between horizontal competitors — the universities — related to price.

“Students were told there were no exceptions to the requirement – even if a divorce court order was issued concerning college expenses,” the lawsuit states. “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 lawsuit also highlights that College Board’s effort was led and organized by individuals from the involved universities including College Board’s current chair of Financial Assistance Assembly Council from Columbia University, and Harvard’s Director of Financial Aid who was a chair at College Board.

The Costs

While FAFSA pertains to federal financial aid and does not require the financial information of noncustodial parents, a CSS Profile is only required at 250 private schools, and only CSS requires noncustodial parent financial information.

The lawsuit outlines the cost impacts in a brief example in which a student with divorced parents is applying to colleges: “Consider a FAFSA school that costs $35,000 and a Profile school that costs $75,000… This student’s custodial parent is unmarried, earns a modest income and rents a home. Her noncustodial parent earns high income, is remarried to a high earner and owns a home. The FAFSA school counts only the income of the custodial parent. The CSS Profile counts the income of the custodial parent, the noncustodial parent and the stepparent. FAFSA calculates the family contribution at $10,000, which the CSS Profile calculates it at $50,000.”

In 2024, the Washington Post reported that 45 million Americans have debt from student loans totaling more than $1.7 trillion, and studies cited in the lawsuit link high levels of student loan debt to poor college performance, anxiety and depression. The complaint also quotes the dean of students at Boise State University in reporting that around one third of college students in the U.S. lacks enough to eat as well as stable housing.

Learn more about the firm’s antitrust case against College Board and 40 of the nation’s top private colleges and universities.

About Hagens Berman

Hagens Berman is a global plaintiffs’ rights complex litigation law firm with a tenacious drive for achieving real results for those harmed by corporate negligence and fraud. Since its founding in 1993, the firm’s determination has earned it numerous national accolades, awards and titles of “Most Feared Plaintiff’s Firm,” MVPs and Trailblazers of class-action law. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.

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