Two college students and two recent graduates filed an antitrust class-action lawsuit targeting 32 selective colleges—including five Ivy League schools—on Friday Aug. 8, in the Massachusetts District Court. They allege the institutions colluded to treat Early Decision (ED) admissions as an exclusive, binding commitment, even though the process itself isn’t legally enforceable for most teenage applicants. The lawsuit goes on to argue that such treatment makes it more difficult for students to get fair financial aid packages, cheating them out of thousands of dollars.
The plaintiffs name the Common App and Scoir, which owns the less common Coalition App, as defendants. The Consortium on Financing Higher Education (COFHE)—which includes all 32 schools—is also named as a defendant. The Consortium says its mission is to make higher education more accessible by sharing data and research between its member organizations.
The lawsuit accuses the schools of carrying out a so-called “horizontal agreement,” in which the competing colleges agree not to recruit or admit students who’ve already been accepted ED somewhere else. For instance, if a student is accepted ED to Amherst College, the remaining 31 schools would automatically reject that student.
The lawsuit argues that this sort of agreement is both an illegal antitrust violation and a way of inflating tuition costs for students.
ED is portrayed as binding by all colleges. Schools do this in order to increase their ED acceptance rates. For instance, Amherst’s are nearly four times higher than their Regular Decision (RD) rates. By treating ED as binding, these schools hope to eke out an advantage over other schools to ensure enough students.
Many M-A students choose to take advantage of higher ED acceptance rates. “I choose to ED to Tulane because I knew that it was my top choice and the acceptance rate for ED is significantly higher than regular decision or early action,” senior Shayne Porter said. Porter was accepted to Tulane last week.
Although the binding structure of ED is typically recognized by applicants, the lawsuit notes that there is no legal basis for such a statement. “Early Decision is not based on any enforceable contractual obligation, it [is] an ‘honor-bound agreement’ that imposes an ‘ethical’ obligation, but ‘doesn’t have any legal standing,’” the lawsuit stated.
The lawsuit alleges that the schools effectively drive down competition and illegally treat ED as a binding agreement by sharing lists of ED admits and mutually agreeing to treat those students as off-limits.
A paper by Ruby Shellaway, a former author for the Yale Law Journal, is also cited in the lawsuit. She equates the practice with price gouging. “Just as it is illegal to act in combination with competitors to set different prices for different customers, it is also illegal for competitors to grant each other exclusive access to certain customers,” Shellaway wrote in the paper.
The lawsuit also contends that such collusion prevents students’ abilities to get sufficient financial aid offers from schools.
Even if a student is accepted into their ED school, they might still apply to other schools afterwards in order to get a better financial aid offer from their first-choice school. This is because students can “shop around” for financial aid by getting better financial aid offers from other schools, and then ask their ED school to match those offers.
When COFHE schools reject qualified students who were accepted ED elsewhere, applicants lose the ability to “shop around,” and might be stuck with insufficient ED financial aid offers.
“A student can only negotiate financial aid with the school that admitted him. In the remaining negotiations, the student has given up his leverage: He cannot make a credible threat to go elsewhere, because his name has already been removed from other schools’ applicant pools,” Shellaway wrote.
This situation is worsened by the fact that many students do not know the precise amount of aid they will get upon acceptance. Aid calculators are frequently inaccurate in projecting the amount of aid a student can get, and guarantees of meeting “100% of demonstrated need” aren’t always dependable, given that “demonstrated need” is based on a college’s assessment of an applicant’s need, not their own.
The lawsuit also notes this practice especially affects low-income students who rely on financial aid.
Many M-A students have decided to avoid ED in general to keep their options open or find financial aid that best supports them. “I had to apply for the FAFSA, CSS Profile, and I feel like you wouldn’t be able to do as much with financial aid if you were [applying ED] to one set college,” senior Brealyn Trujillo said.
M-A’s college and career advisors have dealt with similar considerations in the past, and ultimately recommend exercising extreme caution when applying ED. “Early Decision (ED) is not always the wisest choice for students who must consider the cost of college, and who eventually want to compare financial aid offers,” college and career advisor Mai Lien Nguyen said. “Discuss affordability BEFORE applying.”
It’s still unclear when the lawsuit will make it to court. Similar class-action lawsuits have taken anywhere from a few months to as long as several years, meaning that this year’s ED applicants will remain unaffected. Eventually, if the lawsuit succeeds in court, colleges may be forced to revise their ED policies to address the suit’s concerns.
