Lawyers 
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The lawsuit lists the following groups as being eligible for class action complaint, which encompasses “at least tens of thousands of members”. It sounds like Miller is in group ii.
- The proposed Class is composed of all persons who have
(a) enrolled in one or more of Defendant Schools’ full-time undergraduate programs and
(b) directly purchased from one or more of Defendant Schools education not fully covered by grant-only financial aid and
(c) were either
– (i) admitted through the Early Decision process and received financial aid in the form of school-provided grants for any semester in which they attended the school or
– (ii) admitted through any decision process and did not receive financial aid in the form of school-provided grants for any semester in which they attended the school
(d) during the period beginning four years prior to the filing of this Complaint until the effects of Defendants’ continuing conduct cease.
My school overcharged me and the education was minimal at best. Maybe I can join :). Well my dad. He paid.
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You’d need to have been admitted in past 4 years at listed schools. The idea is that filling a substantial portion of class via ED artificially inflates sticker price, so there is increased cost for full pay students, regardless of whether they applied ED or RD. This is discussed in the Harm To Students section beginning on 125. An example quote is below. I personally do not think this particular claim has merit (not a lawyer, so little idea about chance of settling lawsuit favorably), but I do think early decision is problematic for students as whole, for some of the reasons that are mentioned in other claims.
- First, Early Decision permits colleges and universities to raise the full cost of attending the school by focusing on non-price-sensitive students who are able to pay full tuition and have indicated that they will not accept competing offers from other schools if they are admitted. By identifying and isolating a group of price-insensitive applicants to fill a substantial portion of their classes, schools are able to increase their power to raise prices. These students are willing to accept artificially inflated tuition in the absence of competition in exchange for the apparent possibility of an increased likelihood of acceptance to a single school, which allows the school to set a higher price for full tuition and fees.
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Interesting, you’d think more ED equals more full pay - that they could lower the price to hit that max on the curve.
I thought I read most schools show a cost to educate above tuition but they bring in funds from other places.
I agree no merit but I also agree I’m not an attorney. It does seem like a lot of frivolous lawsuits get settled. You know, $10 mil, but we admit no guilt. Will be interesting to follow.
Thanks for the explanation.
I wonder if the school could expel the student. Bad optics, gives him more ammo - but I would.
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High endowment per student colleges often get the bulk of revenue from non-tuition sources, allowing them to spend far more than just tuition revenue on students. Nevertheless average sticker price tuition has increased far above inflation at most of the listed colleges. The class action includes the graph below:
The lawsuit claims that ED enables this rapidly increasing tuition trend, and tuition would not have increased as rapidly without ED. This is where I think claims become more nebulous. I expect the trend of tuition increasing far above inflation has more to do with legislators pressuring super high endowment colleges to spend a larger portion of their endowment.
Decades ago, Harvard and maybe others chose to spend a larger portion of endowment by increasing tuition while also increasing financial aid substantially such that effective tuition was close to $0 for students with low income. Now tuition is $0 for students with above US median income at many high endowment colleges. The net of increased sticker price tuition and increased FA resulted in similar inflation adjusted net (tuition - FA) revenue for college, while also spending a larger portion of endowment. $0 tuition for low income families and sharp discounts for middle income families had good optics and was popular. Other colleges soon followed the trend.
While ED may be a tool that helps getting enough full pay kids and avoids getting too many high need kids in this high sticker price / high FA environment, it would be hard proving that it is required or causal. I am not aware of notable differences in the sticker price trends mentioned above between colleges that offer ED and do not offer ED. Similarly sticker price trends do not change when a particular college adds or removes an ED policy. I expect this type of claim would be straightforward to break down in a lawsuit.
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I think it has more to do with obsessed parents willing to pay ‘any price’ for a name. We really saw that in the scandal that caught up Felicity Huffman and Lori Laughlin the other year - like going to Wake Forest assures that your kid has ‘made it’. Schools like Wake and Tufts have so many full pay - it makes you wonder how high is too high ??
Yep. But what they should be looking it is net tuition and/or net COA. For some colleges with a high proportion of full pays, that could be increasing, but in total (in the US) net tuition for 4 year colleges has been decreasing for more than a decade.
These students could have chosen a school that gives a higher discount. They may have been sucked in to believe that the admit rate is higher in ED for unhooked students. Which it might be. But we don’t have that data. And yes, the whole prestige thing.
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Except a number of the schools targeted in the lawsuit are need-blind and/or meet full need, and you can get out of ED if the financial package doesn’t work, so I don’t think that argument really holds water.
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To some point I agree, but especially if a student is worried about a couple of thousand dollars being make or break, you really don’t know how much it’s going to cost. How many people have had their FA changed after acceptance, due to another scholarship being added from somewhere - a department, to sweeten the deal, or on appeal? Or you qualify for a stated scholarship, but it’s a range that the university doesn’t tell you until after you apply.
This person got no money/aid.
If he applied elsewhere -let’s say Baylor, who is known to add merit aid in April to entice those who haven’t accepted, he easily could have switched.
People do need to plan for annual inflation too at schools that don’t lock the cost.
But any student has a chance to choose another.
Many kids who get into Wash U, for example, likely qualify for a $30k or less public.
That’s a $250k difference.
You make that choice and it’s fine. But then don’t whine later.
Wanna sue them because you feel they promised something -like giving you strong communication skills or implied a great internship or job opportunity that you feel you didn’t get - I understand.
But being RD and suing about the cost - hmmm - shame on you. IMHO of course 
Even a college which provides education at a deficit (subsidized by other sources of money like endowment income, research grants, state subsidy for state universities’ in-state students, etc.), having a student cohort with lower aggregate financial aid need makes it easier to avoid running a deficit as a whole.
But it is likely that most private colleges other than the wealthiest ones are tuition dependent.
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I think this lawsuit is stupid.
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If anything, ED has become a device that counters the “crap shoot” nature of selective admissions. Highly qualified applicants matriculating through ED are off the main pool, possibly opening some spots for others. Whereas thousands of top REA or EA applicants are “shopping” colleges through RD and making it much more difficult for the entire applicant pool.
Just some basic observations.
Generally speaking, it is highly problematic from an antitrust law perspective when competitors agree with each other not to compete for certain potential customers.
Of course when a customer signs a binding contract with a competitor, it is OK to then not compete for that business during the term of the contract. Indeed, trying to induce such a potential customer to break their contract with a competitor could be considered tortious interference with contract.
But part of the gist of this lawsuit is the customers in question, namely the prospective students, are NOT signing a binding contract with a competitor when they apply ED. So the basic question is whether a competing college agreeing not to continue competing for a prospective student once they apply and are accepted ED somewhere else is an illegal agreement not to compete.
I am not saying there is an obvious answer to that question, but it is definitely an interesting question.
In terms of impact, ED as a practice certainly limits price competition in some cases. Like, we see in practice ourselves that students will get competing offers in RD, sometimes they are surprised by how good some of those offers end up being, and then they consider that as part of their decision on which offers to accept. A student being accepted ED and then withdrawing all their other applications means such students will never see such competing offers.
How much such a restriction then affects market prices in general is the sort of complex empirical question that ultimately ends up in the hands of economic experts. Again, I have no particular insight on that topic, I am just noting it is a typical sort of question in civil antitrust cases.
Finally, at least in many antitrust cases (not all, which is a complicated topic itself), even if the plaintiffs can show that the defendants have agreed to something which has some anticompetitive effects, they may be able to defend the practice by showing it has procompetitive effects as well, and the procompetitive effects outweigh the anticompetitive effects.
Because it is typically the burden of the defendants to identify and prove any such procompetitive justifications, a civil antitrust complaint typically will not spend much time on such subjects. But Paragraph 148 of the compaint is referring to this concept:
- Colluding to allocate individual applicants to single institutions in the absence of
competition is not reasonably necessary to achieve any legitimate procompetitive aim. The Early Decision system distorts, rather than improves, the matching of students to schools.
I think it is safe to assume that if this case gets anywhere at all, the defendants will not leave it at that, they will instead argue that ED does in fact have a lot of procompetitive benefits.
Again, I am just sketching out here some of the basics of civil antitrust law and some of the key questions that will determine what happens with this case. I am not suggesting any particular answers to those questions.
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But doesn’t this also ignore that many students in fact want a decision earlier than normal and are happy with the bargain they strike to get it?
Sure, there might be last minute tickets available to the Broadway show I want to see at half price , but for the certainty of having a seat I like, I’ll pay full price.
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So as a general matter, individual customers agreeing to the terms of an anticompetitive program is not a defense. The basic principle is that individual customers have to deal with markets as they find them.
However, in cases like this where the customers are not strictly required to participate in the program, their participation can be seen as evidence there could be procompetitive benefits to the program.
And I suspect what you mentioned will undoubtedly be one of the procompetitive benefits the defendants cite, that you may in fact get an early decision–although as an aside, since the colleges reserve the right to defer you to RD instead of giving you an answer in ED, that is a rather weak promise on their side of this bargain.
In any event, for any procompetitive benefit the defendants show, the plaintiffs can then try to show there is a restrictive alternative means of achieving the same benefit. In this case, I suspect the alternative will be very obvious–non-binding Early Action, which is actually offered by many colleges.
So the defendants may have to show there is something about the binding nature of Early Decision that makes it uniquely beneficial to their consumers. And that strikes me as an interesting challenge.
One of the important things to keep in mind in this type of antitrust case is there are many things which can be done unilaterally that would become illegal if they are instead a product of an agreement between competitors.
So, any given theater can likely decide to charge more for advanced tickets, reserved seating tickets, or so on without any risk of antitrust liability.
However, if a group of competing theaters got together and agreed they would all do that, that could easily lead to a viable antitrust case.
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I see what you’re saying, and the explanation is helpful. What I’m struggling with is that this isn’t about price-fixing. It’s about giving preference to applicants with a first choice. Is it different than giving loyal customers advance access to a sale? Or loyal fans first crack at tickets?
Or is it simply because of the exclusivity?
And then how is this different than giving preference to athletes, or legacy, or …any other “special” category of student?
So there have been many successful antitrust cases where a program appears to be about one thing, but at least part of the alleged motive for the alleged conspirators was financial benefits in the form of being able to charge higher prices. This is something the plaintiffs would ultimately have to prove, but generally speaking what are sometimes called customer allocation agreements are widely recognized to be plausible candidates for such a theory.
I note on this subject, Paragraph 8 is rather interesting:
- Both the existence of this restraint on trade and its effect on price have long been acknowledged, including by university insiders. For example, Defendant Vanderbilt University’s current general counsel, Ruby Shellaway, argued in the Yale Law Journal in 2006 that Early Decision reflected an unlawful conspiracy that violated the antitrust laws: “In essence, the competitor schools, who—under E[arly] A[ction] or regular decision—might have lured the student away with a better financial aid package, promise not to compete with the school to which the student has been admitted. The colleges have, through their agreement, created monopolies on certain customers’ business for themselves—an illegal customer allocation and horizontal restraint of trade. 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. Each school, by sending out a list that its competitors will enforce, is guaranteed a listed student’s attendance, and 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.”
Statements like that from credible insiders can be really helpful at least for getting past a motion to dismiss.
So in antitrust terms, the critical elements of this sort of case are that there is: (a) an agreement between competitors; and (b) the agreement involves allocating customers such that Competitor B agrees not to compete for customers allocated to Competitor A, and vice-versa.
Hypotheticals where one company unilaterally decides to offer different terms to different customers depending on when they make a purchase are not of this form, because they both lack an agreement between competitors and there is no allocation of customers.
This is subject to the same sort of distinction. Presumably in order to, say, give legacy preferences, a college does not have to agree with any competitors to do so, and competitors are not restricted in competing for those applicants.
But, suppose College A and College B entered into an agreement where College B would not compete for legacy applicants to College A, and College A would not compete for legacy applicants to College B.
That sort of agreement would quite likely be subject to antitrust liability.
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