Vaibhav Sharma, Senior Photographer
The Ivy League’s collective practice of not offering athletic scholarships violates antitrust law, a recent lawsuit filed against all eight Ivies contends.
The class-action suit was brought forth by Tamenang Choh and Grace Kirk — previous and current Brown University basketball players, respectively — on Tuesday.
Under the “Ivy League Agreement,” all eight member schools agree to neither award athletic scholarships nor compensate educational expenses for the approximately 8,000 student athletes competing across the league. The Ivies do not offer merit scholarships of any kind, a policy which also applies to athletes. This makes Yale and its Ivy peers the only eight of the 350 total Division I NCAA schools to not offer financial awards to exceptional student athletes.
“The Ivy League Agreement has direct anticompetitive effects, raising the net price of education that Ivy League Athletes pay and suppressing compensation for the athletic services they provide to the University Defendants,” the lawsuit states.
The plaintiffs contend that this agreement violates the Sherman Antitrust Act of 1890 in two distinct ways. The first is functionally a price-fixing argument, in which the suit alleges that the eight universities have illegally created and implemented a joint policy resulting in tuition costs that are higher than they would be without league-wide collaboration.
The second argument is based in the League’s lack of compensation for student athletes. This legal framework draws on the 2021 NCAA v. Alston Supreme Court case, in which the Court decided that the NCAA cannot limit the reimbursement of education expenses — which could include textbooks and technology fees — that are provided to athletes for their athletic services.
The suit seeks treble damages — awards up to three times the actual damages — for a class of current and former Ivy League athletes, going back to March 7, 2018. It also seeks an end to the Ivy League Agreement, as well as to “any similar contract, combination, or conspiracy” by the Ivies, according to a press release sent to the News.
The financial aid argument
Though Yale was founded in 1701, the Ivy League did not officially assemble until 1954. Nine years prior, in 1945, the presidents of the eight Ivy League schools signed the first Ivy Group Agreement, in which they collectively agreed not to offer athletic scholarships.
In the years since, the agreement has expanded, but the general premise holds that athletes are admitted as students and are awarded financial aid on the same terms of “academic standards and economic need as are applied to all other students.”
Generally, antitrust law requires that entities not collaborate on setting prices because it limits competition and thus can artificially inflate prices, adversely impacting consumers and lining the pockets of vendors. In 1992, Congress carved out a temporary exemption in antitrust law. Per the exemption, universities were allowed to coordinate financial aid policies if they admitted all students on a “need-blind” basis — which means none of them could consider an applicant’s financial need in their admissions decisions.
Two years later, Congress passed the Improving America’s Schools Act of 1994. Section 568 of the act extended and broadened the temporary exemption, which Congress has consistently renewed for the past 28 years. On Sept. 30, 2022, however, it expired.
The 568 Presidents Group, initially a collective of 28 universities that now includes 17, formed in 1998, taking their name from the Section 568 exemption. The 568 Presidents Group members share a common methodology to calculate need-based financial aid packages, which would be anticompetitive without the 568 provision. A pending lawsuit filed against the 568 Presidents Group last year — before the exemption’s expiry — argues that the coalition is not truly need-blind. According to the suit, the 17 schools allegedly factor familial financial circumstances into admissions decisions by considering donor gifts in standard admissions as well as financial means in waitlist and transfer admissions.
Adherence to the need-blind requirements of Section 568, and the section’s recent expiration, form the basis of the financial aid argument in Tuesday’s lawsuit. Now that Section 568 has expired, the Ivies can no longer jointly calculate the amount of financial aid they offer — and accordingly, cannot jointly decide not to offer athletic scholarships. But if the League is not truly need-blind, as the 568 lawsuit alleges, then the Ivies would have always been subject to the full provisions of antitrust law.
The implications of the lawsuit against Section 568 and its expiry could have implications beyond merely athletic scholarships, as a continued collaborative league-wide policy on withholding merit scholarships — including, but not limited to, athletic awards — is no longer exempt from antitrust provisions.
The compensation argument
The second legal argument in Tuesday’s lawsuit is about the Ivy League’s decision not to compensate student athletes for their education-related expenses.
In June 2021, the Supreme Court ruled unanimously in NCAA v. Alston that the NCAA barring reimbursement of student athlete’s educationally-linked fees, such as textbooks or technology, was a violation of antitrust law. Therefore, the NCAA is constitutionally prohibited from limiting student athletes’ compensation. The suit claims that the Ivy League collectively declining to reimburse or compensate student athletes’ educational expenses would not be legally permissible under Alston as it also stymies competition.
“We hope that this lawsuit will bring Ivy League athletics into the 21st century by subjecting these universities’ treatment of Ivy League athletes to the antitrust laws, just as the courts have applied such laws to all other NCAA Division I athletic programs,” said Eric Cramer, one of the lawyers for the Ivy athletes, in a press release sent to the News.
Distinguishing between the financial aid argument and the athlete compensation argument is important because Section 568 only applied to financial aid price fixing, not the refusal to compensate. If the court decides that the universities were truly need-blind, they would not be liable for historical damages under antitrust law. However, even then, the plaintiffs could still hope to win their case — and historical damages under this lawsuit — on the compensation framework.
Ivy League Executive Director Robin Harris wrote in a statement that each intercollegiate athletics opportunity “represents an individual decision and carries its own distinct features and benefits.”
Within the Ivy League, Harris pointed to the opportunity to receive need-based financial aid — which not all universities in the NCAA offer — as one such feature.
Plaintiffs Choh and Kirk allege in the lawsuit that while they received some need-based financial aid, the Ivy League Agreement precluded them from receiving the full sum of award money that they otherwise could have.
“Brown recruited, accepted, and enrolled Choh, providing him need-based financial aid, which did not cover the full cost of his tuition, room, and board, and incidental expenses,” the lawsuit reads. “But for the Ivy League Agreement, Brown would have awarded Choh a full athletic scholarship and compensated/reimbursed him for the athletic services he provided to Brown.”
The lawsuit states that Choh received full athletic scholarships from at least three Division I schools, while Kirk received at least one.
What happens next?
In anticipation of potential rebuttals from the defendants, the lawsuit includes preliminary responses to predicted counter-arguments from the Ivies.
In the late 1950s, The Overlap Group — which included the eight Ivy Leagues along with the Massachusetts Institute of Technology — jointly agreed that they would not attempt to outbid each other for talented students. They determined a special formula to calculate financial aid offers, different from the Congressionally-derived standards that most universities employed at the time.
In 1991, the Department of Justice brought an antitrust suit against The Overlap Group. The Ivies all settled, while MIT went to trial. MIT lost in district court, and then the case went to a court of appeals before the university finally settled. It was this lawsuit that prompted the 1992 exemption that would eventually become Section 568.
During MIT’s appeal in the early 1990s, the school argued that it was operating with a limited amount of money for financial aid. If it did not limit awards, MIT said, then universities would have to compete for athletes and may be unable to guarantee necessary support for other students with financial need.
“That was their argument,” Robert Litan LAW ’77 GRD ’77 ’87, one of the prosecuting lawyers behind Tuesday’s lawsuit, told the News in October of 2021 after the NCAA v. Alston decision. “I did not believe that argument was valid at the time. These were rich schools then, they are much richer now.”
Litan also is one of the lawyers behind the Section 568 lawsuit and formerly was deputy assistant attorney general in the Justice Department’s Antitrust Division.
The lawsuit similarly argues that the Ivy League member universities are wealthy enough to afford offering athletic awards to their student athletes, given that their endowments collectively exceed $170 billion. It contends that the defendants “monetize” their athletes’ performances to bolster their institutional “revenue and prestige.”
In Harris’ statement, he raised another argument in favor of the League’s current policy — the preservation of the prestigious academic environments that each of the eight member schools offer.
“The Ivy League athletics model is built upon the foundational principle that student-athletes should be representative of the wider student body, including the opportunity to receive need-based financial aid,” Harris wrote. “In turn, choosing and embracing that principle then provides each Ivy League student-athlete a journey that balances a world-class academic experience with the opportunity to compete in Division I athletics and ultimately paves a path for lifelong success.”
The lawsuit also anticipates this response, pointing specifically to other prestigious schools like Stanford University, Duke University, the University of Notre Dame and Rice University as examples of institutions where “academic excellence is paramount” and athletic scholarships are offered. At each of these schools, per the suit, student athletes receive merit-based financial aid and compensation without hindering the institution’s academic prestige, even within a competitive university market.
““We intend to demonstrate in this lawsuit that academically prestigious universities can comply with the antitrust laws with respect to their academically and athletically high-achieving students and still maintain their institutions’ reputations for academic excellence,” Litan said in the press release.
While the lawsuit is specifically about athletic scholarships, the expiry of Section 568 calls the league-wide policy on all merit scholarships, beyond just athletic awards, into question.
However, the legal argument for damages wrought by refusal to offer athletic awards is easier to construct. Particularly with schools as selective as the Ivies, it is difficult to predict whether admitted students would or would not have received additional merit scholarships. But with Division I athletes, comparing recruitment strategies and offers from the Ivies and from their Division I peers offers a more objective way to understand the impacts of the Ivies’ alleged antitrust violations.
In other words, it is possible to identify, with a reasonable degree of confidence, past or present students who would have gotten an athletic award based on recruitment and other offers. It is harder to define or prove whether non-athletes would have gotten a scholarship, as the parameters are less objective.
However, if the plaintiffs win, it could pave the way for merit aid scholarships for a large class of people beyond student athletes.
Without the blanket refusal to offer merit scholarships, there would likely be more competition within the Ivy League. This would, in turn, likely incentivize universities to give out additional financial aid across the board to attract top students — especially for those universities that can afford to do so.
University Spokesperson Karen Peart declined to comment for this story.
“The Ivy League agreement is particularly egregious given the huge amounts of money these schools have in their endowments,” said Ted Normand, co-counsel for the proposed class, in the press release. “Where hundreds of Division I schools with much fewer resources compete without limits on athletic scholarships and compensation or reimbursement, the Ivy League schools have no excuse for not doing the same.”
While the Ivies now cannot make a collective decision, the schools may still individually decide to continue withholding merit or athletic scholarships from students.
The lawsuit was filed in the United States Connecticut District Court.