By Hillary Pettegrew, Esq.
Several well-publicized antitrust actions targeting education over the last five years have resulted in multimillion-dollar settlements. These cases highlight the importance of understanding the legal and financial risks that higher educational institutions face and how higher education leaders can mitigate them.
Educational Antitrust Issues
Higher ed institutions are subject to federal antitrust laws including the Sherman Antitrust Act1, the Clayton Antitrust Act2, and the Federal Trade Commission Act3. These laws seek to promote marketplace competition and prevent unfair business practices.
In 2020, the National Association for College Admission Counseling (NACAC)4 settled a Department of Justice (DOJ) case over rules that allegedly violated the Sherman Act by restricting NACAC members’ ability to recruit applicants and transfer students.
Private lawsuits filed in 2022 and in 2024 accused “elite” private institutions of colluding to limit financial aid awards to students5. Ten schools sued in the first lawsuit and settled in 2024 for $284 million6, while two more reached settlement agreements in January 2025 worth over $35 million7.
Other practices8 may violate antitrust laws, including “anti-poaching” agreements (agreeing not to recruit faculty, other employees, or students from each other) and agreements to limit employee compensation or benefits. These agreements do not have to be formal, explicit, or written to violate the law. Sharing certain sensitive data, such as wage information, with other institutions also can violate antitrust laws.
Reduce Your Risk With Proactive Steps
Antitrust litigation is complex and costly. Increasing public anger over rising costs of education and a perceived absence of transparency from institutions may fuel future lawsuits.
To avoid anti-competitive practices and reduce your institution’s chances of being sued for alleged antitrust violations:
Understand the Legal Landscape
Ensure your officials have a general understanding of antitrust law and how it may apply to your institution. This can help you spot potential problems and recognize when your institution needs legal advice.
The DOJ9 and the Federal Trade Commission10 enforce antitrust laws. They usually coordinate their investigations and focus on different areas. Both can impose significant fines for civil violations, and people impacted by antitrust violations can sue. The DOJ also can bring criminal prosecutions. This is rare; but in egregious cases, people involved in violations can face up to 10 years in prison.
Check Your Policy
Consider working with legal counsel to create a written policy11 and/or guidelines12 mandating employee compliance with antitrust laws and prohibiting certain conduct13. Your rules might, for example, require officials to make decisions about tuition and financial aid independently and without consulting or working with other institutions.
Consider State Laws
Most states have antitrust laws (modeled on but not necessarily identical to federal laws) applicable to commerce within their borders, and states often work cooperatively with federal agencies to pursue antitrust violations. State laws typically allow lawsuits by private individuals. In addition, state attorneys general can sue to enforce their own laws, or they might sue on behalf of the state’s citizens to enforce federal antitrust laws.
While federal law generally preempts conflicting state law, most state antitrust laws were designed to complement rather than conflict with federal laws. As a result, an institution could potentially find itself facing separate lawsuits in federal and state courts over the same alleged anti-competitive conduct.
Train Personnel
Regularly train employees, especially those in admissions, financial aid, and human resources, to recognize and avoid risky conduct. What some might consider “cooperation” or “collaboration” between peer institutions could amount to unlawful collusion under antitrust laws.
During training:
Review your relevant written policies or guidelines.
Advise employees to avoid formal or informal agreements with other institutions regarding admissions practices (such as an explicit promise or implied understanding not to recruit students who commit to attending other institutions), tuition/financial aid packages, employee compensation packages, or sharing sensitive data.
Explain how employees can report concerns related to antitrust issues.
Emphasize the possible penalties for antitrust violations, including significant fines and the risk of serious, long-term damage to your institution’s reputation.
BOTTOM LINE
Effective risk mitigation requires leadership commitments to understand the legal landscape, review policies, and train personnel. By prioritizing these strategic initiatives, institutions can help protect their financial health, avoid lawsuits, and mitigate reputational risk while aligning with evolving regulatory expectations.
https://www.law.cornell.edu/wex/sherman_antitrust_act#:~:text=Sherman%20Antitrust%20Act%20of%201890,of%20foreign%20or%20interstate%20trade.
https://www.law.cornell.edu/wex/clayton_antitrust_act
https://www.ftc.gov/legal-library/browse/statutes/federal-trade-commission-act
https://www.justice.gov/atr/case/us-v-national-association-college-admission-counseling
https://www.forbes.com/sites/michaeltnietzel/2024/10/10/federal-lawsuit-targets-40-universities-for-financial-aid-price-fixing/
https://www.reuters.com/legal/government/us-judge-approves-284-mln-settlements-financial-aid-litigation-2024-07-19/
https://www.forbes.com/sites/michaeltnietzel/2025/01/20/caltech-johns-hopkins-university-settle-in-financial-aid-lawsuit/
https://www.justice.gov/atr/media/1384596/dl?inline
https://www.justice.gov/atr/case/us-v-national-association-college-admission-counseling
https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/enforcers#:~:text=The%20injunction%20preserves%20the%20market's,banks%2C%20railroads%2C%20and%20airlines
https://policies.duke.edu/policy/duke-university-antitrust-policy/
https://ogc.stanford.edu/sites/g/files/sbiybj22406/files/media/file/stanford-antitrust-guidelines-memo_accessible.pdf
https://www.smu.edu/ola/briefingpapers/antitrust-compliance-guidelines