The chairmen of the House and Senate Judiciary Committees sent letters Wednesday to two consulting firms — along with the College Board, Oracle and a company called Ellucian — seeking information about any tuition pricing algorithms they have built and the college applicants’ data that feeds them.
The consulting companies, with names like EAB and Ruffalo Noel Levitz, may be unfamiliar to college applicants and their families. But colleges know the consultants well, since most schools hire one of the two firms, or smaller consulting companies, to help them attract students and plot financial aid offers.
“Colleges that agree to use a common pricing formula or algorithm, or knowingly do so through a third-party company, are likely violating the antitrust laws,” said the letters, which were signed by Representatives Jim Jordan and Scott Fitzgerald and Senators Charles Grassley and Mike Lee, all Republicans.
The demands cite reporting in The New York Times in May, which pointed to past comments by an EAB executive who had described its work as “a form of arbitrage” and added that its financial aid optimization strategies were “like working in the financial markets.”
EAB boasts of up to 200 variables that colleges and universities can use when setting an individual admitted student’s price, drawing from data on over 350 clients and 1.5 billion “student interactions.” Ruffalo Noel Levitz has over 1,900 clients feeding its software models for everything from financial aid to fund-raising.
Ruffalo Noel Levitz did not comment immediately upon receipt of the letter. An EAB spokeswoman said the company was still reviewing it.
In those letters, the lawmakers are seeking descriptions of all products and services and their capabilities; explanations of the purpose of any pricing and financial aid algorithms and the data that the algorithms train on; and the names of the higher education institutions that use each product or service.
Violations of antitrust law could occur, the letters said, even if competitors were not discussing pricing with one another if “they are delegating their decision making to a software or algorithm” that results in the exchange of confidential pricing information.
Spokeswomen for both the College Board — which licenses a need-based aid calculation tool called the CSS Profile to colleges — and Ellucian said they were still reviewing the letters. Oracle, which has a higher education technology unit, declined to comment.
The peculiar college pricing system — in which the list price is often not the real price, and different administrators handle need-based aid and merit aid — has drawn much scrutiny from regulators and politicians in recent years.
Earlier this year, this same group of politicians asked for an enormous amount of information from Ivy League schools, citing “apparent collusion to raise tuition prices.” The breadth of the inquiry included communications among the schools and the Common App and U.S. News, which publishes school rankings, as well as information about early decision practices.
In 2019, the Department of Justice announced an antitrust settlement with the National Association for College Admission Counseling. Association rules had effectively prevented schools from poaching students after May 1. Those rules went away, and now schools like Syracuse make six-figure discount offers to teenagers who have already committed to other colleges.
And in 2013, the department investigated discussions between college presidents about whether there was anything school officials could do to stop giving so much merit aid to students who didn’t need it. Later that year, the government dropped the inquiry, but not before scaring many higher education leaders away from discussing the matter.
In the current investigation, lawyers who work on antitrust cases say that crucial questions about the “common pricing formulas” could include the following: If EAB and Ruffalo Noel Levitz have access to dozens of pieces of data from tens of thousands of applicants from several hundred schools (including who responded, how they responded, and to what sort of financial aid offers), how do the firms feed that into the algorithms that help client colleges set prices and discounts?
Another question, lawyers say: Do they do it in real time, on an ongoing basis, in the middle of application season?
And once the algorithms are trained, do clients that compete with one another ultimately end up drawing on collective data to set prices?
“It is about time that policymakers are scrutinizing the enrollment management industry,” said Stephen Burd, a senior writer and editor on education policy at the think tank New America and the editor of a book about enrollment management. “If policymakers have any hope of solving the problems of college access, affordability, equity and indebtedness, they are going to have to finally acknowledge the industry behind the curtain.”
Georgia Nugent, a former president of Kenyon College and Illinois Wesleyan University, was one of the higher education leaders questioned by the Justice Department in 2013. She said the language in Wednesday’s letters presumes that colleges accept advice unquestioningly.
“In my experience, we didn’t just blindly take what the algorithm said,” she said, adding that she had worked at institutions that were clients of both EAB and Ruffalo Noel Levitz.
“An algorithm might have suggested X, Y or Z, and that did not accord with our values and objectives,” said Ms. Nugent, who is now the president in residence at the American Academic Leadership Institute. “To assume that colleges are just automata and do what consultants tell us to do, at least in my experience, would not be true.”
Ron Lieber has been the Your Money columnist since 2008 and has written five books, most recently “The Price You Pay for College.”
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