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Source: Congress.gov
Summary
This hearing investigates allegations of anticompetitive behavior, including price fixing and coordinated financial aid practices, among the Ivy League universities. Witnesses present evidence of long-standing collusion through shared financial aid formulas, restricted admissions, and inflated tuition costs, with data showing tuition increases of over 180% since the 1970s. Key figures such as Dr. Preston Cooper and Mr. Alex Shea detail how these practices result in administrative bloat and limit access for middle- and low-income students. The hearing also explores the broader implications of these practices, including impacts on education affordability, student debt, and academic freedom. While some witnesses, including Dr. Morgan, argue the focus is misplaced given the small market share of Ivy League schools, others emphasize that the issue reflects a larger problem in higher education affordability and the need for systemic reform, including tuition caps, increased financial aid, and stronger antitrust enforcement. The hearing concludes with bipartisan recognition of the urgent need to address education costs and protect student access.
Participants
Transcript
Objection. The chair is authorized to declare recess at any time. We welcome everyone to today's hearing on collusion in higher education. Without objection, I ask unanimous consent for Mr. Nails to be permitted to participate in this hearing to question the witnesses if a member yields him time for that purpose, of which I will yield him five minutes. I'll now recognize myself for an opening statement. According to the National Center for Education Statistics, U.S. colleges and universities are a $700 billion industry.
Harvard Endowment alone, which stood north of $50 billion as of 2023, is larger than the GDP of 120 nations. Six of the eight Ivy League schools have endowments exceeding $10 billion. Ivy League schools should be competing to offer the best product at the best price possible. Instead, they collude to raise prices and spend their inflated cartel earnings on administrative bloat. According to the Bureau of Labor Statistics, while products like cars, clothing, and TVs have become more affordable as businesses reduce costs to attract buyers, the cost of college tuition and textbooks has risen by more than 180%. and respectively continues to go higher. Today, the cost to attend an Ivy League school can exceed $100,000 per school year. Ever since the Ivy League was established in the 1950s, these schools have been focused on exclusivity, maximizing profits and artificially inflated prestige rather than expanding access to education and serving students. In 1950,
Harvard charged $600 a year for tuition. Today, that number is nearly $60,000. Not only has tuition skyrocketed, but these schools are also deliberately keeping class sizes small to maintain exclusivity and inflate their perceived prestige. Between 1978 and 2023, while the U.S. population grew by just 50%, and the number of applicants increased by 450 percent, Harvard reduced its class sizes by 258 seats. Across all Ivy League schools, demand has steadily increased, yet admissions remain flat. As you can see from the graph displayed, although each Ivy League school on average receives more than 50,000 applications, it accepts less than 2,000 students per year. These price increases and shrinking class sizes are not coincidental. Ivy League schools have a history of coordinating pricing practices to avoid competing on cost. In 1958, MIT and the eight Ivy League schools formed what is widely known as the, quote, Ivy Overlap Group, a cartel to fix prices. These schools agreed to use a shared formula for calculating financial aid, ensuring students admitted to multiple schools would pay the same price no matter where they went. In 1989, the Department of Justice began investigating these practices and ultimately filed an antitrust lawsuit. By 1993, all nine schools had settled. In response, Congress adopted Section 568 of the Improving America's Schools Act of 1994, granting colleges an antitrust exemption, provided they did not consider a student's ability to pay while making admissions decisions. In 1999, elite schools formed a new cartel, the 568 President's Working Group.
The goal was the same, to create a shared financial aid formula and not compete for students based on price. Even with a legal exemption, these elite schools still chose profit and prestige over access and fairness. In 2022, former students sued many of the Ivy League schools for colluding on financial aid formulas that favored wealthy applicants. In one internal document uncovered through Discovery, A college administrator complained about not being able to find enough qualified students with well-off parents to pay the high sticker prices. She said, quote, sure hope the wealthy next year raise a few more smart kids. Ivy League schools can maximize the price paid by each student using detailed financial data collected through the college scholarship services profile or the CSS profile. It is a comprehensive financial aid form that most colleges do not require. The CSS profile gives these schools access to sensitive information, including family home ownership, savings and retirement accounts, and more. With that information, they can determine how much a prospective student's family can apparently afford to pay and then charge them that amount. Despite valuing their degrees at nearly $400,000, having multi-billion dollar endowments and receiving billions more in taxpayer funding, these schools don't prioritize accessibility or quality of education. They prioritize profit and prestige. And even though the Ivy League schools no longer have an antitrust exemption to coordinate on pricing, tuition continues to skyrocket. By setting the industry standard for tuition, the Ivy League creates an umbrella effect that allows other colleges to charge more than they could in a competitive market.
Today, we are starting an overdue conversation about how the Ivy League's anti-competitive practices may harm students, taxpayers, and ultimately our country's future. I want to thank the witnesses again for appearing before us today, and I look forward to your input. I will now recognize the ranking member, Mr. Nadler, for his opening statement.
Mr. Chairman, before I start my opening statement, let me mention a personal stake in this. I am the first member of my family to go to college.
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