NATALIE REGAN/THE HOYA
Plaintiffs in an antitrust price-fixing lawsuit against 17 universities, including Georgetown University, claimed $685 million in damages, which could triple to more than $2 billion, in a Dec. 16 filing.
The lawsuit, filed in 2022, alleges illegal collusion between universities through the use of a shared financial aid methodology that reduced the amount of aid provided to students from 1994 to 2022. President Emeritus John J. DeGioia (CAS ’79, GRD ’95) chaired the group, called the 568 Presidents Group, that oversaw the use of the formula.
Of the 17 schools in the original lawsuit, 10 have already settled for a total of $284 million. The remaining universities in the lawsuit include Georgetown, Massachusetts Institute of Technology, University of Notre Dame, Cornell University, University of Pennsylvania, California Institute of Technology, and Johns Hopkins University.
Ted Normand, a co-lead attorney for the plaintiffs, said the schools used the common formula to create a price floor for students, which schools were allowed to raise but not reduce to grow their endowments.
“The evidence is that, rather than competing based on the aid they could have easily afforded to give out, Defendants participated in a cartel to help them grow their endowments by over $165 billion to more than $220 billion by the time the cartel disbanded, by agreeing to set prices based on certain pricing ‘principles’ and methods,” Normand said in a press release. “The schools thereby saved themselves, and cost their students, hundreds of millions of dollars in aid.”
A university spokesperson said Georgetown’s participation in the 568 Presidents Group is part of its larger efforts to increase financial aid and support students.
“Georgetown’s participation in the 568 Presidents Group was consistent with our ongoing work to ensure that a student’s economic background does not limit their ability to attend Georgetown,” the spokesperson wrote to The Hoya.
“We are proud to meet the financial need of every admitted undergraduate student through a combination of direct aid, grants, scholarships, school employment and educational loans,” the spokesperson added.
Robert Gilbert, the other lead attorney for the plaintiffs, said the collusion harmed students over the nearly 20-year period who paid more than they should have to attend university.
“Our motion today spells out very substantial evidence supporting our claim that the Defendants
colluded with each other for twenty years on financial aid, and that the illegal collusion resulted in the Defendants providing far less aid to students than would have been provided in a free market,” Gilbert said in a press release.
“The motion also documents Defendants’ pattern of favoring students from wealthy backgrounds, which we assert disqualifies Defendants from shielding their behavior behind an inapplicable antitrust exemption,” Gilbert added.
The plaintiffs allege Georgetown engaged in financial favoritism to prioritize donations. DeGioia allegedly created an annual “president’s list” of 80 students after reviewing the student’s financial background and donation capacity rather than academic and extracurricular information such as transcripts, teacher recommendations or personal essays, writing “Please Admit” on the list.
According to the filing, the admissions rate of the “president’s list” ranged between 83% and 100%, significantly higher than the non-priority admissions rate which ranged from 9% to 13%. Of the students not accepted from the list, some were allegedly encouraged to attend another university for one year before applying to transfer to Georgetown.
The university spokesperson said the university contests the allegations and will defend its financial aid decisions in court.
“We strongly disagree with the plaintiffs’ claims and will continue to vigorously defend ourselves in court,” the spokesperson wrote to The Hoya. “We believe the university has acted responsibly and always with the goal of only admitting students who will thrive in, contribute to and further strengthen our community.”
Darius Wagner (CAS ’27), incoming Georgetown University Student Association (GUSA) vice president and organizer with Hoyas Against Legacy Admissions, a student group petitioning the university to end legacy preference, said the university should immediately take steps to address the favoritism of wealthy students.
“Admissions to our university should not be a pay-to-play scheme,” Wagner told The Hoya. “Working-class students work twice as hard just for Georgetown to neglect their talent and roll out the red carpet for the wealthy and well-connected.”
“If the university refuses to change, we must demand better,” Wagner added.
The new filing comes amid another lawsuit filed Oct. 7 alleging that the university, 39 other schools and the College Board, a nonprofit organization that provides testing programs and financial information for schools, violated antitrust laws in decreasing financial aid for students with noncustodial parents.
Georgetown’s undergraduate programs require students who are applying for financial aid to submit both the Free Application for Federal Student Aid (FAFSA) — the application for federal student aid through the Department of Education — and the College Board’s College Scholarship Service (CSS) Profile — an online application that evaluates students’ demonstrated need.
The College Board allegedly artificially lowered the amount of financial aid students could receive because the CSS has a requirement to submit all information regarding a noncustodial parent’s information, including their financial earnings. These financial earnings from noncustodial parents then influences the total amount of aid for which a student may qualify.
According to the price-fixing lawsuit filing, Dean of Admissions Charles Deacon (CAS ’64, GRD ’69) gave admissions staff an annual memo that said certain students should be admitted because of special interests related to donations and financial contributions.
“The special interest admissions policy allows the university to consider special circumstances in the admission of some qualified candidates who might not be admitted competitively,” Deacon wrote in the memo. “These special circumstances normally are related to the potential the university will find by developing an association with the family or its sponsor or by continuing a long term association with the family or sponsor not covered by the legacy policy.”
“The university is under-funded and under-endowed and we need to do a better job of enlisting the support of America’s wealthiest families and corporations in assisting us,” the memo added. “Special interest admits should provide this type of opportunity to enhance and strengthen our future.”
Deacon had previously said that donations to the university could benefit a student in the admissions process in a 2014 interview with The Hoya, which was cited in the filing.
“If you were close to the edge and the family’s given to the annual fun every year or something, that might be enough of a tip to get you in,” Deacon told The Hoya in 2014. “If you’re a little farther from the edge, but the family has built Regents Hall, that might tip a little farther.”
The filing also alleged favoritism in DeGioia’s annual participation in the Allen & Company Sun Valley Conference, which sees billionaires and business leaders convene in Sun Valley, Idaho. DeGioia reportedly met with an applicant at the conference who was later deferred but placed on the “president’s list” after four months of communications between DeGioia and the applicant’s father. The student’s family later allegedly donated $250,000 to the university, with a calculated donation capacity of over $25 million.
The filing said DeGioia’s reasoning for adding the student to the list because of divorce-related hardships still did not explain the wealth disparities.
“Asked why he put this applicant on the President’s List, DeGioia claimed he did so because the student had ‘overcome … obstacles,’ namely that the parents had been divorced,” the filing said. “Plaintiffs noted in their filings that DeGioia’s rationalization, if applied regardless of wealth, would have resulted in thousands of additional Georgetown admissions.”
The university spokesperson pushed back on the claims, saying the university does not accept gifts from family members or associates of applicants.
“Per university policy, Georgetown does not knowingly solicit or accept gifts from individuals who have or may soon have a relative or person of close personal interest applying for admission to the university,” the spokesperson wrote.
Maren Fagan contributed to reporting.