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The lawsuit, House v. NCAA, was filed by former athletes who sought money from the use of their names, images, or likenesses. The settlement agreement is “revolutionary,” according to the athletes’ lawyers: It requires colleges to share with players the astounding sums of money they collect from television contracts and other athletics deals.
Pending final consideration of the settlement by a federal judge in April, all NCAA athletes who competed at the Division I level between 2016 and 2024 will get a share of $2.75 billion, nearly all of it for those who played football and men’s and women’s basketball. The ongoing cost of the settlement could dwarf that initial payout. Individual colleges will be allowed to spend up to $20.5 million to compensate athletes in the year ahead. Over the next decade, the estimated cost of these payments could total more than $20 billion, according to the plaintiffs’ lawyers.
House may turn out to be just as influential as it is lucrative. The settlement is the most recent example of how the antitrust action — a legal line of attack typically used to rein in cartels or colluders in the corporate world — has become increasingly fruitful against higher education.
Colleges have long argued that their work is different from that of the corporate sector in an essential way: They are serving the public good, not trying to maximize their revenues or market share. Federal law prohibits corporations, including nonprofits, from undermining free-market competition. Think of a large organization leveraging its market control to suppress workers’ pay, or a group of companies colluding to raise prices for a product. Now think of the NCAA holding the line on athletes’ pay, or institutions collaborating to set financial-aid awards. What’s the difference? Colleges need a wider berth to avoid acting as competitors, they say, to preserve their special mission as producers of knowledge and social capital.
That argument has, in the past, earned the sector crucial exemptions from antitrust law. But House, and other similar lawsuits, aim to blow a hole in it. Though the lawsuits attack different campus functions, they share a core allegation: that colleges, associations, and other industries that support higher education are effectively acting as cartels — protecting their own interests and resources, leaving students and consumers to pay the price.
Fairness is the fundamental issue, and the complaint extends across campuses: Athletes say it’s not fair that coaches at big-time sports programs earn millions of dollars while athletes can’t even sell their autographs. Middle-class families and students complain it’s not fair that selective colleges give them too little financial aid while admitting so many children of wealthy alumni and donors. Researchers argue it’s not fair that scholarly journals charge them to submit their work for publication while expecting them to review articles for free.
Those actions aren’t just unfair, litigants and advocacy groups say; they’re illegal under the nation’s antitrust laws. Fairness and legality don’t always go hand in hand, of course. But the legal disputes amplify a broader public skepticism of higher education that could embolden plaintiffs and influence the courts.
While much of the public believes in the economic value of the bachelor’s degree, it has less faith that colleges are carrying out their core mission of truly leveling the playing field for society. Trust in higher education has eroded because the public sees colleges as pursuing their own financial benefits at the expense of athletes and other students, says Neal Hutchens, a professor in the University of Kentucky’s department of educational-policy studies and evaluation who studies higher-education law.
“If you look like a corporation,” Hutchens said, “courts and others, including students and parents, will start to view you as more of a corporation.”
If you look like a corporation, courts and others, including students and parents, will start to view you as more of a corporation.
It’s a turning point that took decades of legal battles against the NCAA’s oversight, which defined athletes as amateurs and prohibited them from earning any money related to their participation. The NCAA argued that such rules were necessary to differentiate intercollegiate athletics from professional sports leagues, protect the purity of the college game, and maintain a level playing field across institutions. Intercollegiate athletics, the association noted in a past rules manual, “should be motivated primarily by education and by the physical, mental, and social benefits to be derived.”
That justification has repeatedly run headlong into another imperative: cashing in on the popularity of college sports. In 1981, for example, the Universities of Oklahoma and Georgia filed an antitrust suit against the NCAA, seeking the power to negotiate television rights for football games. The association had sought to negotiate with the television networks and prohibited the universities from competing for more money for their very popular product.
Three years later, the Supreme Court ruled that the association could not prevent individual colleges from negotiating. The ruling opened the door to media-rights contracts — initially for colleges and now for entire conferences — that total billions of dollars.
As the value of those deals has soared, so have the salaries of coaches, especially in football and men’s basketball, and for athletic directors at top-tier programs. More than 90 Division I football coaches earn at least $1 million annually.
But until recently, athletes remained unable to benefit financially from endorsing products, or when their names and likenesses were used in popular video games. In 2010, for example, five football players at Ohio State University were suspended from playing in five games the following season because they had exchanged memorabilia such as jerseys and championship rings for tattoos and cash.
A year earlier, a former basketball player for the University of California at Los Angeles, Ed O’Bannon, sued the NCAA, arguing that athletes should be able to earn compensation. O’Bannon, who earned Most Valuable Player honors in the NCAA Tournament for leading UCLA to the national championship, said he signed on as lead plaintiff of the suit after seeing his image in a video game that the NCAA had authorized. Four years later, a federal judge ruled in O’Bannon’s favor, finding that the association’s rules violated antitrust laws, and that the university could pay athletes up to $5,000 annually above their athletic scholarship.
A federal appeals court eventually rejected the $5,000 stipend but allowed athletes to receive scholarships that covered academic expenses beyond tuition and room and board. That opened the door to later rulings, said Kassandra Ramsey, a lawyer who specializes in intercollegiate athletics, and ushered in a new era, making it clear that the association’s rules for athletes were subject to antitrust laws.
“The NCAA’s biggest fumble,” she punned, “was not settling the O’Bannon case.”
The Supreme Court ruled unanimously in a 2021 case, Alston v. NCAA, that even limiting athletic scholarships to the college’s “cost of attendance” was too restrictive. In his concurring opinion, Justice Brett Kavanaugh finally and forcefully dismissed the NCAA’s defense of amateurism. “Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate,” Kavanaugh wrote.
The justices did not determine whether athletes could be paid beyond educational benefits. But their ruling was another step toward that possibility, and it rejected the NCAA’s argument that the ideal of amateurism was enough to justify skirting antitrust laws.
“They got the nail in the coffin from the Supreme Court,” Ramsey said, “and now their only avenue is pleading to Congress to get an antitrust exemption.”
A handful of federal lawmakers have signaled interest in awarding the NCAA such an exemption. But the athletes appear to have the momentum, and it will be a challenge to pass any major legislation in a narrowly divided Congress.
Groups of selective colleges have long cooperated to discuss their methodologies for disbursing financial aid and to set awards for admitted students. In theory, colleges do so to prevent exploitation of students, sacrificing some revenue by providing aid to families with the least ability to pay. But when the institutions appear to fall short of that lofty ideal, can cooperation tip over into collusion?
Two antitrust lawsuits argue just that. One lawsuit, filed in January 2022, accuses Ivy League institutions and a group of similarly well-resourced colleges of colluding for decades to limit financial-aid awards to low- and middle-income students. The suit claims the colleges’ practices caused students to be overcharged by nearly $700 million; total damages could reach $2 billion, according to news accounts.
The 17 colleges being sued cooperated, between 1994 and 2022, under a federal law which allowed them to meet and discuss their aid awards, so long as they were entirely “need blind” — deciding whether to admit students, that is, without considering their financial resources. The institutes met annually to set benchmarks meant to ensure that no member used financial aid as a way to entice only wealthy students.
But the colleges violated the law, according to the plaintiffs, because they weren’t actually need blind. In fact, the lawsuit alleges, the institutions admitted some students precisely because their parents were alumni or wealthy donors. Lawyers representing the students discovered, for example, that several of the universities kept lists of such preferred applicants, admitting them at a far-higher rate than students from less-privileged families.
The case is far from over, but 10 of the 17 colleges named in the suit have already offered to pay out $284 million to settle, while denying any wrongdoing.
A more recent lawsuit also cites antitrust law in challenging the financial-aid practices of 40 selective colleges that require applicants to complete the CSS Profile, an online service used by scores of institutions to determine students’ financial need. By agreeing to use the CSS Profile, the plaintiffs argued, the colleges formed a cartel. The cartel then shortchanged students, according to the suit, by considering the income of noncustodial parents in their aid calculations. (The College Board, which runs the form, said it’s up to colleges to select the option requiring noncustodial parents to provide financial information, which institutions use to help them understand the financial needs of applicants and their families. “We are confident that we will prevail in this lawsuit,” the College Board said in a written statement.)
Like the antitrust suits against the NCAA and its members, these suits have their roots in a decades-old dispute. In this case, the conflict is between the federal Department of Justice and the so-called Overlap Group — a small coalition of wealthy private colleges that collaborated openly on financial-aid benchmarks.
For decades the group had met to consider the applications of students who applied to more than one of its members — hence the name “overlap.” In 1989, the Justice Department opened an antitrust investigation into that practice. A settlement led to the 1994 law — called the 568 Exemption, after the section of the Improving America’s Schools Act in which it was written — that allowed need-blind colleges to collaborate.
But Congress let that measure expire in 2022. Colleges “never complied with the congressional mandate that they be need-blind regarding all students and all families in admitting students,” Robert D. Gilbert, a lawyer for the plaintiffs, told the Columbia Daily Spectator when the exemption ran out.
Colleges must clear a high bar to convince a restive public that their admissions practices serve the public good. The colleges being sued are “gatekeepers to the American Dream,” the newer complaint against 17 colleges says. Their conduct is “particularly egregious,” it adds, “because it has narrowed a critical pathway to upward mobility that admission to their institutions represents.”
“Having more low-income students is a good thing,” Amanda Feldman, who graduated from Georgetown University in 2022 and signed on as a plaintiff to the suit, told The Chronicle in an interview. “I think that, historically, Georgetown has not shown that it necessarily wants those students on campus.”
Government regulators, too, have taken a skeptical view of other admissions and enrollment practices that colleges describe as beneficial to students.
In 2019, the Justice Department pressured the National Association for College Admission Counseling to change its code of ethics. The rules, required as a condition of membership in the association, were meant to prevent colleges from poaching students with offers that had nothing to do with the quality of the education, said Angel B. Pérez, president of NACAC.
But because the code also set limits on when and how colleges could recruit students, the department argued, the code violated antitrust laws, perhaps preventing some students from getting a better deal on financial aid.
The settlement was “a victory for all college applicants and students across the United States who will benefit from vigorous competition among colleges for their enrollment,” said a news release from the Justice Department in December 2019.
The resulting changes to the ethics code allowed members to compete for students by offering incentives, such as reserved parking or a guaranteed spot in a preferred dorm. The changes also meant that colleges could entice students to switch even after they had committed to attending another institution. In doing so, they injected even more uncertainty into the budgets of tuition-dependent colleges.
If you are rigorous, you’re called a cartel. If you lower the bar, you’re accused of not protecting consumers.
If the plaintiffs win the legal argument that a small group of the most-selective institutions has effectively suppressed the number of low- and middle-income students attending them, one unintended consequence could be this: The number of such students at those colleges may decline. Instead of cooperating on the amount of aid they will give to low-income students, colleges may respond to competitive pressure by seeking to attract a larger number of wealthy applicants.
“These are all very prestigious institutions, and they would have no problem filling the whole class with students willing to pay the full sticker price,” said Phillip Levine, a professor of economics at Wellesley College who has also written for The Chronicle.
Catharine Bond Hill, former president of Vassar College and an economist by training, said the real issue for middle- and low-income students is not whether they can afford the most-selective and wealthy colleges, but whether they can even get in.
On average, just 11 percent of undergraduate students at Ivy League colleges take out federal student loans, compared with about 38 percent of undergraduates at baccalaureate institutions over all, according to federal statistics. But the average share of Pell-eligible students at those colleges is just 18 percent, while low-income students make up nearly 32 percent of undergraduates over all.
Hill acknowledges that many of the wealthiest colleges could enroll more students from middle- and low-income families. But there are always tradeoffs, she explained: The money spent on providing more financial aid also cuts into the dollars that pay for the faculty and amenities that attract students from high-income families.
A framework to improve those numbers, Hill said, could redefine the terms of colleges’ antitrust exemption: The government could require colleges to meet a threshold of Pell-eligible students to receive some protection from antitrust laws.
Paying athletes could also have unintended impacts on college sports and the bottom line of many institutions. In paying the $2.8-billion House settlement, $1.6 billion is expected to come directly from Division I member colleges, with 60 percent of that from the colleges outside the most-lucrative “power” conferences.
One fear is that the cost of the settlement will make it impossible for even the wealthiest colleges to support the wide number of Olympic sports that are typically paid for with revenues from football and basketball programs. The possibility of cutting sports will be greatest at smaller and less-wealthy institutions.
Eliminating less-lucrative sports and enrolling fewer low-income students are unappealing prospects to most campus officials. But antitrust scrutiny leaves colleges pinched: When they compete in an open market, they are criticized for taking the sorts of actions that are excused, even praised, in other industries, like maximizing revenues by seeking the most high-paying students. But when they act in ways that limit market competition, they come under fire for distributing benefits inequitably or for failing to satisfy their employees and students.
Higher education has valid reasons to prioritize collaboration over competition in admissions, said Pérez, the president of NACAC. Chief among them: High-school students should not be expected to make the same informed decisions about their futures as adults determining where to work or what to purchase.
But institutions are struggling to make the case that they can be trusted to collaborate, he said, because they haven’t been transparent with students about how prices are set or how the admissions process works.
Ironically, bringing free-market clarity to pricing and process might help institutions argue that they’re fundamentally distinct. “We’ve created a system that is opaque, and that doesn’t make people feel good,” Pérez said. “People want to know what are the rules, how do I get in, and all of that. And we haven’t been very good about that.”
The association also acknowledged that, because antitrust laws “are tailored to the needs of the commercial marketplace, they often fit awkwardly into the world of nonprofit educational organizations.”
In the current political climate, one area that the brief identifies stands out: accreditation.
Accreditation is “by definition, collective action by rivals who have the power to exclude a school” the brief notes. Critics have often referred to accreditation as a “cartel,” and on occasion accreditors have faced antitrust lawsuits. Those suits have generally failed, the NACUA brief explains, but they become more plausible “where an injured school claims that it has been excluded as a result of collective decision-making by rival schools seeking to advance their commercial interests.”
Traditional agencies that accredit most public and nonprofit colleges, on the other hand, have not, so far, been seen as engaging in commercial activity that would subject them to antitrust law, according to the NACUA brief.
But accreditors have been threatened by President Trump, who blames the commissions for creating standards on diversity, equity, and inclusion. Many of the conservative voices that are allies of the president, such as the Heritage Foundation, have also referred to accreditors as cartels.
Accreditors may not face serious antitrust suits, says John R. Przypyszny, a lawyer who specializes in accreditation, but they may have a hard time explaining their role to dubious lawmakers. “It’s a no-win situation,” he said. “If you are rigorous, you’re called a cartel. If you lower the bar, you’re accused of not protecting consumers.”
Meanwhile, antitrust accusations have swirled around the scholarly publishing industry. In September, a professor-in-residence at the University of California at Los Angeles, filed a sweeping antitrust lawsuit against six scholarly publishing firms, alleging that they colluded to restrict competition for new research by preventing authors from submitting their work to more than one journal at a time and by fixing payment for faculty peer reviewers at $0.
Publishing experts raised significant doubts about the suit’s claims, noting that just because the publishers have similar policies doesn’t mean they are colluding. But it’s a sign that even faculty members are feeling misused by a system that generates an estimated $10 billion in revenues, according to the legal complaint, largely built on the backs of their voluntary service.
And more antitrust actions may be coming. The most-obvious target of future litigation on this front, according to many economists and legal experts, is a familiar one: big-time athletics.
One lawsuit, challenging an Ivy League policy that prohibits athletic scholarships, was dismissed last year by a federal court judge but has been appealed to the Second Circuit Court of Appeals. The Ivy League members are among the nation’s wealthiest commercial organizations, with a combined $170 billion in endowments, the complaint argues, and “multiple billionaires and millionaires willing to write seven-, eight-, and nine-figure checks — often to support Ivy League athletics.”
The complaint serves as a reminder: As long as there are large amounts of money at stake, higher education will have to beat back claims that it’s acting as a cartel.
