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Reviews |  Do Colleges Deserve an Antitrust Exemption?

“It’s so hard to figure this out if you’re an antitrust person used to dealing with the business world,” said Sarah Flanagan, vice president of government relations and policy development for the National Association of Independent Colleges and Universities. . “It’s not necessarily the same dynamic in the higher education market. Competition has probably driven up prices. (Flanagan’s organization includes most members of Group 568, but she said she does not speak on their behalf or respond to the lawsuit allegations.)

In this regard, it is interesting to look at research published last year by Ian Fillmore, assistant professor of economics at Washington University in St. Louis. It looked at how a larger group of 1,200 colleges and universities used information gathered about family finances to allocate financial aid. He found that low-income students received only about 22% of the money schools saved by giving less financial aid to wealthy students who didn’t need it. The remaining 78% of the money was kept by the schools to be used as they see fit. In an interview, Fillmore said, “It doesn’t sound bad if you think they’ll do wonderful things with their money. If you think they’re spending their money on something socially useless, that’s terrible.

The class action lawsuit is likely to cause prolonged pain for elite schools. To decide how much to claim, litigants will likely seek detailed records of admissions and financial aid decisions. It could be annoying. First, the lawsuit finds that the defendants “overcharged more than 170,000 financial aid recipients by at least hundreds of millions of dollars.”

Beyond that, I find it hard to imagine that Congress will want to renew the schools’ antitrust exemption after September 30. In the early 1990s, the exemption could be interpreted as a reward for universities that chose to make their admissions decisions blind to need. and a way to encourage more universities to do the same. But elite colleges and universities are now finding it harder to argue for special treatment. They are richer now than they were three decades ago, their tuition prices have skyrocketed and conservatives are increasingly suspicious of them. In 2019, only 33% of Republican and Republican voters believed colleges and universities had a positive effect on ‘the way things are done in this country,’ compared to 53% who said so in 2012, a survey found. from the Pew Research Center. Among Democrats and those leaning towards the Democratic Party, the positive share has remained stable over the same period at 67%.

Personally, I like these schools. I think they produce amazing research and education. I interview economics professors from the 568 group pretty much every week and even sat through one of the accused (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 respect, the issues are remarkably similar to those of the Supreme Court’s June ruling that the NCAA could not bar relatively small payments to student-athletes. In this case as in this one, the schools argued that the competition would be ruinous. But is it?

Free trade has always been a punching bag for interested politicians and businessmen, as you mention in your Monday bulletin. But its virtues are indisputable. Just look at GDP growth for everyone and the number of nations that have been lifted out of poverty because of it. You can see the data in Rhymes With Fighter, my book about Clayton Yeutter, who liberalized trade in the 1980s and 1990s as a US Trade Representative and then as Secretary of Agriculture. Strategic and vital industries – for example, chips and the like – should probably be protected. But I suspect these are exceptions.

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