A bombshell lawsuit accuses some of the nation’s top universities of operating in a cartel-like fashion, favoring students from wealthy and privileged backgrounds and artificially inflating the cost of attendance for financial aid recipients.

The lawsuit was filed by five undergrad students in Chicago federal court. At the heart of the lawsuit is an antitrust exemption that is applied to universities, Section 568 of the Improving America’s Schools Act of 1994. The exemption allows schools to communicate with one another using a composed formula to determine a student’s financial need; however, they should not consider a student’s ability to pay during the application process. The term “need-blind” is used to describe this process.

The suit details that the named schools “have conspired to reduce the amount of financial aid they provide to admitted students. This conspiracy, which has existed (with slightly varying membership) for many years, thus falls outside the exemption from the antitrust laws.”

Twenty-eight schools communicate with each other to come up with the financial aid formula through a process called the consensus methodology. The lawsuit claims that at least nine of the schools have taken into consideration an applicant's ability to pay and were not “need-blind.”

As a result, there was a disparity among applicants as students who were able to pay were given precedence over students who may not have been able to pay. These need-based policies were established to help promote diversity and create economic equality in prestigious schools which have long been known to serve students from wealthy and prestigious backgrounds.

The lawsuit alleges that the schools “explicitly aimed to reduce or eliminate price competition among its members. As a result of this conspiracy, the net price of attendance for financial-aid recipients at Defendants’ schools has been artificially inflated.”

The 16 schools named in the lawsuit include Brown, the California Institute of Technology, the University of Chicago, Columbia, Cornell, Dartmouth, Duke, Emory, Georgetown, the Massachusetts Institute of Technology, Northwestern, Notre Dame, the University of Pennsylvania, Rice, Vanderbilt, and Yale.

The lawsuit details that while these need-based policies were developed to level the playing field, universities including Penn and Georgetown still favored students from wealthy and prestigious backgrounds. Robert D. Gilbert of Gilbert Litigators and Counselors is one of the attorneys representing the students. He explains, “These elite universities are gatekeepers to the American Dream, and they are closing the gate more than they should.

The lawsuit details that nine schools including Columbia, Dartmouth, Duke, Georgetown, MIT, Northwestern, Notre Dame, Penn, and Vanderbilt have taken into consideration the financial needs of wait-listed applicants and have favored children of wealthy families or from past and potential donors. The complaint also details that the other seven schools may or may not have adhered to need-blind policies but conspired with the other schools. “These seven Defendants knew or should have known that the other nine Defendants were not following need-blind admissions policies,” The complaint details.

“Privileging the wealthy and disadvantaging the financially needy are inextricably linked. They are two sides of the same coin,” the complaint goes on.

Brain E. Clark, a spokesman for Brown University, shared through an email with the Washington Post, “Based on a preliminary review, the complaint against Brown has no merit and Brown is prepared to mount a strong effort to make this clear.”

Schools including Columbia, Duke, and Rice have come forward stating that they do not comment on pending litigation. Yale has shared that its University’s “financial aid policy is 100 percent compliant with all applicable laws.” A spokeswoman for Caltech has shared that while they cannot comment on specific allegations, “We have confidence, however, in our financial aid practices.”