00:00And from Virginia. Thank you, Mr. Chairman. I appreciate the hearing and I appreciate the
00:05comments of the ranking member. Let's define what collusion is. Let's actually look at Cornell Law
00:09School's definition, an Ivy League definition of collusion in antitrust law. Horizontal collusion
00:15exists where competitors at the same market level agree to fix or control the prices they will
00:19charge for their respective goods or services. For instance, two parties may collude by limiting
00:24or restricting supply, sharing insider information, or dividing the market. It's very clear that
00:29the eight Ivy League member institutions have a long history of colluding with each other
00:33and other elite higher education institutions. Back in 1958, they formed a cartel called the
00:39Ivy Overlap Group that created a common formula for calculating financial aid packages to ensure
00:44that a student admitted to one or more of the overlap group institutions would pay the same
00:48maximum price to attend, regardless of the institution that they chose. The overlap group would accomplish
00:53this by sharing information and determining the maximum price that admitted students' families
00:57could afford to pay. Later, operating under a now expired antitrust exemption, many of the Ivy League
01:02institutions and other elite higher education institutions formed the 568 President's Working
01:08Group, which likewise created a common formula to ensure 568 PWG schools would not compete on price.
01:16So this behavior led to lawsuits and settlements against many of the Ivy League institutions.
01:22Dr. Cooper, does this cartel of elite higher education institutions have the ability to raise
01:27the cost for students and their families who are attempting to pay for college?
01:31Absolutely, Congressman. I believe the opaque financial aid system enables Ivy League colleges
01:36to charge much higher prices than they would be able to in a competitive market. There is a billion
01:40dollar consulting industry that helps Ivy League institutions figure out exactly how much each family
01:45is able to pay and then charge that amount.
01:47We've seen collusion on pricing before enactment of the Section 568 exemption, and while the exemption
01:53was in effect, now we are concerned it persists today, even though the exemption has expired.
01:59What gaps in enforcement have allowed Ivy League institutions to effectively operate as a pricing cartel?
02:05So the prices that colleges charge are very opaque right now. You have to apply and be admitted in order
02:11to figure out how much you're going to pay. And at that point, the college sort of has you captive,
02:16that it's going to be very difficult for you to comparison shop at that point, go to a different
02:20school, and you kind of have to accept the price that the school is charging you, or else maybe not
02:24go to college.
02:26So a similar question to Mr. Martin. These institutions, through the overlap group and the 568
02:32President's Working Group, used this common financial aid formula for decades to make sure they weren't
02:38competing on price. Do you think that these institutions could still be using that same revenue
02:42maximizing formula to calculate financial aid awards that they used while the exemption was
02:47in place?
02:48Well, that's the subject of an ongoing litigation in the Northern District of Illinois. And to put
02:52a finer point, I make no prejudgment as to what the outcome of that litigation would be.
02:57I only note that 12 of the 17 member institutions have settled it for a total of $320 million. It
03:04survived a motion to dismiss. It's gone on through discovery. And quite candidly, some of the documents
03:12in that case will be challenging for the remaining defendants.
03:16And if they are shown to be using the same formula, could that present significant antitrust issues?
03:23It could. There are substantial damages alleged in the case.
03:26Mr. Shee, Brown's estimated cost of attendance during the 25-26 academic year is $97,284 per year.
03:37That means Brown values a degree from its institution at almost $400,000. Do you think a degree from
03:43Brown is worth nearly $400,000?
03:46That's a very good question. I think that empirically, it's just barely worth it. But I think that for the
03:53kids who it could help the most, that's too much for them to pay up front.
03:58I appreciate that. I would argue that it does not, the worth is not four times the worth of an
04:05in-state school or six or eight times that of a community college education. And with that, I would
04:12yield back.
04:13Gentleman yields back.
04:14Mr. Chair, I have a UC.
04:17Members, recognize?
04:18I ask unanimous consent to enter into the record ABC News article. Judge finalizes $25 million
04:23settlement for victims of Donald Trump's fraudulent university. And USA Today, judge finalizes
04:29$25 million settlement for students of Sham University.
04:33Without objection. A gentleman from California is now recognized for five minutes.
04:37Thank you, Mr. Chairman. Appreciate you and the ranking member. Thank you for holding this
04:41hearing today.
04:42Thank you, Mr. Chairman.
04:44Thank you, Mr. Chairman.
04:45Thank you, Mr. Chairman.
04:46Thank you, Mr. Chairman.
04:47Thank you, Mr. Chairman.
04:48Thank you, Mr. Chairman.
04:49Thank you, Mr. Chairman.
04:50Thank you, Mr. Chairman.
04:51Thank you, Mr. Chairman.
04:52Thank you, Mr. Chairman.
04:53Thank you, Mr. Chairman.
04:54Thank you, Mr. Chairman.
04:55Thank you, Mr. Chairman.
04:56Thank you, Mr. Chairman.
04:57Thank you, Mr. Chairman.
04:58Thank you, Mr. Chairman.
04:59Thank you, Mr. Chairman.
05:00Thank you, Mr. Chairman.
05:01Thank you, Mr. Chairman.
05:02Thank you, Mr. Chairman.
05:03Thank you, Mr. Chairman.
05:04Thank you, Mr. Chairman.
05:05Thank you, Mr. Chairman.
05:06Thank you, Mr. Chairman.
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