Opinion Do universities deserve an exemption from antitrust law?

“It’s so hard to find out if you’re an antitrust person who is used to dealing with the business world,” said Sarah Flanagan, vice president of government relations and policy development at the National Association of Independent Colleges and Universities. “It’s not necessarily the same momentum in the upper class market. The competition probably led to higher prices. ”(Flanagan’s organization includes most members of the 568 group, but said she did not speak on their behalf or address the charges in the lawsuit.)

In this regard, it is interesting to look at research published last year by Ian Fillmore, an assistant professor of economics at Washington University in St. Petersburg. Louis. He examined how a wider group of 1,200 colleges and universities used the information gathered on family finances to allocate financial aid. He found that low-income students received only about 22 percent of the money the schools saved by providing less financial aid to wealthy students who did not need it. The remaining 78 percent of the money was kept by the schools so that they could use it at their discretion. In an interview, Fillmore said: “It doesn’t sound bad if you think they will do amazing things with their money. If you think they’re spending their dollars on something socially wasteful, it’s awful. “

A joint lawsuit is likely to cause lingering pain to elite schools. In order for the parties to the dispute to decide how much money to ask for, they are likely to look for extensive records of financial aid acceptances and decisions. That could be embarrassing. As a first stabbing, the lawsuit estimates that the defendants “overpriced more than 170,000 recipients of financial aid by at least hundreds of millions of dollars.”

In addition, I have trouble imagining that Congress will want to renew the school antitrust exemption after September 30. In the early 1990s, the exemption could be interpreted as a reward for universities that have decided to make their admission decisions blind. and a way to encourage more universities to do the same. But elite colleges and universities are now finding it more difficult to enforce special treatment. They are now richer than they were three decades ago, their tuition prices have skyrocketed, and conservatives are increasingly distrusting them. According to a Pew Research Center survey, in 2019, only 33 percent of Republicans and Republican-leaning voters thought that colleges and universities had a positive effect on “the way things are going in this country,” down from 53 percent who they stated this in 2012. Among Democrats and people leaning towards the Democratic Party, the positive share remained at 67 percent over the same period.

Personally, I like these schools. I think they produce amazing research and education. Almost every week I do interviews with economics professors from the 568 group and I even visited one of the defendants (Go Big Red!). But I think schools need to prepare for a world where they face the same antitrust scrutiny as anyone else. In this regard, the problems are remarkably similar to those in the Supreme Court’s decision in June that the NCAA cannot prohibit relatively modest payments to student athletes. In this case, as in this case, the schools argued that the competition would be devastating. But it is so?


As you say in your Monday newsletter, free trade has been a boxing bag for politicians and self-employed entrepreneurs forever. But its strengths are unquestionable. Just look at GDP growth for all and how many nations have gotten out of poverty as a result. You can see the data in “Rhymes With Fighter,” my book on Clayton Yeutter, who liberalized trade in the 1980s and 1990s as a U.S. trade representative and then as Secretary of Agriculture. Strategic and vital industries – say chips and the like – should probably be guarded. But I suspect these are exceptions.

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