16 Universities Rely on Controversial 'Section 568' Exemption

Sixteen universities have relied heavily on the exemption known as Section 568 in their legal defense, including Columbia, Cornell, Duke, MIT, UPenn and Yale.

The University of Pennsylvania is one of 16 universities being sued for allegedly violating ... [+] antitrust laws. Jumping Rocks/Universal Images Group via Getty Images
The University of Pennsylvania is one of 16 universities being sued for allegedly violating antitrust laws. This is a major issue for the school, as it could lead to heavy fines and penalties. The school is committed to fighting the charges, however, and is confident that it will ultimately prevail.

As college costs continue to rise, even the nation's most elite institutions are finding it difficult to keep up. Financial aid formulas are complex and often leave families struggling to make ends meet. These days, it's not just parents who are feeling the pinch – even the colleges themselves are struggling to keep up.

The expiration of the 568 Exemption at midnight on September 30th will have a major impact on colleges and universities across the United States. Originally passed as part of the Improving America's Schools Act of 1994, the exemption had allowed colleges to agree on a common financial aid formula without running afoul of the antitrust laws. However, with the expiration of the exemption, colleges will now have to be more careful in how they set their financial aid formulas in order to avoid violating antitrust laws. This could lead to a decrease in the amount of financial aid available to students, as well as an increase in the cost of attending college.

As a leading educational institution, it is our vision that all schools provide an equal and accessible education to all students. We are committed to ensuring that all schools provide an environment that is conducive to learning and personal growth. We believe that all students should have access to quality education, regardless of their background or economic status.

It's encouraging to see that some of the most elite schools in the country are working together to try to level the playing field when it comes to financing a college education. By agreeing on a standard methodology for assessing a family's financial need, these schools hope to provide more aid to students who may otherwise be priced out of attending. It will be interesting to see how this affects admissions patterns in the coming years, and whether other schools will follow suit.

The lawsuit against the 16 schools alleges that they have artificially inflated the net price of attendance for students receiving financial aid. If the plaintiffs are successful in their case, it could mean compensation for more than 170,000 students who have attended the schools over the past 18 years. Additionally, the plaintiffs have asked for an injunction that would prohibit the colleges from discussing and agreeing on financial aid formulas in the future. This case could have far-reaching implications for the way colleges do business when it comes to financial aid.

The suit alleges that some of the schools violated the 568 exemption–and thus the antitrust law–by considering the financial need of students and their families in deciding whether to admit waitlisted or transfer students and by giving preference to children of wealthy past or potential future donors. (Coincidentally, the world’s richest man, Elon Musk, was a transfer student at the University of Pennsylvania, as was former President Donald Trump.) The suit seeks to level the playing field for students who are not from wealthy families, and who may be unfairly disadvantaged in the admissions process. It is an important step in ensuring that colleges and universities are accessible to all students, regardless of their background or economic status.

I am pleased that the District Court Judge has rejected the motions to dismiss the lawsuit against the colleges. I believe that the plaintiffs have made sufficient allegations that the colleges' actions were not protected by the 568 Exemption, and that the case should be allowed to proceed. I hope that this lawsuit will help to bring about change in the way that these colleges operate, and that it will hold them accountable for their actions.

Judge Thomas Kennelly has dismissed a lawsuit that accused several Chicago-area schools of violating antitrust laws. In his 26-page opinion, Kennelly found that the plaintiff's allegations were too broad and speculative, and that the four-year statute of limitations on antitrust had passed.

The Department of Justice has urged a judge to allow an antitrust case against several Ivy League schools to continue. The DOJ has argued that the 568 Exemption, which allows schools to cooperate on admissions, should be narrowly construed and that if at least some of the defendant schools haven’t properly followed need-blind admissions, then an agreement among all of them isn’t protected by the exemption. This is a significant development in the case, and it will be interesting to see how the judge rules.

It is unclear how the expiration of the 568 Exemption might affect the case or, more immediately, the schools’ current financial aid practices. Predictably, the plaintiffs crowed about the expiration. “Now defendants do not have any excuse for their collusion, which must end,” Robert Gilbert, a lead counsel for the plaintiffs, said in a statement. The expiration of the 568 Exemption could have a significant impact on the current financial aid practices of colleges and universities. The plaintiffs in the case are clearly pleased with the expiration of the exemption, and believe that it will put an end to the alleged collusion between the schools.

I support the letter that U.S. Senators Marco Rubio (R-Florida) and Mike Lee (R-Utah) wrote in August in favor of letting the exemption expire and throwing their support behind the lawsuit. I believe that injecting competition back into the higher-education market through elimination of the 568 Exemption and robust enforcement of the antitrust laws by the U.S. Department of Justice will enhance education outcomes and lower student costs.

It is disappointing that spokespeople for Columbia, Duke and Caltech declined to comment on the expiration of the federal financial aid exemption. Cornell University's Joel M. Malina did not directly address questions about whether Cornell will continue to collaborate with other institutions to set financial aid methodology, or whether the university will push Congress to renew the exemption. Instead, he reaffirmed the importance of the exemption.