Do Colleges Break The Law?

College Success Bulletin

The US Department of Justice is investigating colleges for how they grant financial aid awards.

According to the trade publication, The Chronicle for Higher Education, the DOJ sent a letter to undisclosed colleges, indicating that it was concerned that an agreement “to restrict tuition discounting and prevent colleges from changing or improving financial aid awards to individual students” may restrain competition in violation of antitrust laws.

Although I have my misgivings about the investigation (overzealous regulation in general), the DOJ does have a point.

And even if they find no evidence of collusion, I know in my heart of hearts (good legal argument, right?) that colleges do keep tabs on what each other is doing.

Look at tuition-only numbers of top colleges, you’ll notice similarities that can’t be pure coincidence:

Dartmouth: $37,250
NYU: $37,372
Barnard:  $37,538
Haverford:  $37,525
Penn:  $37,376
U Chicago: $37,632
Williams: $37,640
Mount Holyoke: $37,646

(Sadly, these figures are low – they’re from three years ago.)

Let’s put aside the issue of whether these “coincidences” arise from price-fixing, and look at the bigger issue:  college costs and financial aid.

Colleges themselves know that they have a problem – their economic model is unsustainable.

One of the chief reasons – aggressive tuition discounting (bribes), designed to lure students that otherwise would go elsewhere.

In other words, they brought it upon themselves.  They’re playing a high stakes game.

Critics (college presidents among them) argue that these policies have taken away endowment resources that would have otherwise gone to low income families, in favor of affluent students.

I have no interest in debating whether this is true.

Or even bad.

But it’s hard to argue the results:

College costs have skyrocketed (more than a 1,100% increase in the past 25 years), and

Since the mid-1990’s, colleges have given out more merit-based than need-based awards.

That’s a fact. It just “is.”

Who’s getting these merit-based awards?

Mostly upper-income families (those in the upper quartile of income, or what I call “Forgotten Middle Class” families).

Are merit awards only for brilliant, God’s-gift-to-academia students?  MENSA members who cured a deadly disease?

Nope.  I’ve personally witnessed C-plus kids get $20,000 per year offers. (Of course, the higher your grades and standardized test scores, the better.)

What schools give out merit-based awards?

The vast majority of the 2,800-odd four-year colleges in the U.S.  No, not the Ivy Leagues (which do not give any merit awards) or other elite colleges, but pretty much all of the rest.

If you have a good (B-plus/A-minus) student graduating in 2014, and you’re you-know-whatting a brick about how to afford college, this will help – a recording of a new presentation I did for a small group.


Your Correspondent,

– Andy Lockwood