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Carleton Asked to Preserve Communication in DOJ Antitrust Investigation

<artment of Justice (DOJ) has asked Carleton to preserve all communication related to its practice of sharing information with peer institutions about students admitted via early decision (ED). In its letter to Carleton, the DOJ referenced an ongoing antitrust investigation, but did not charge the college or request information.

“Carleton has indeed received a letter from the DOJ, asking us to preserve all communication related to our practice of sharing lists of ED-deposited students with some other institutions,” Vice President and Dean of Admissions and Financial Aid Paul Thiboutot told the Carletonian in an email.

“Right now, all that the justice department is saying is they would like us to hold information––documents, materials––in connection with an investigation that they may be doing,” said College President Steven Poskanzer. “We’re not yet at a point where there is a formal legal process.”
Amherst, Bates, Bowdoin, Colby, Grinnell, Hamilton, Middlebury, Pomona, Wellesley, Wesleyan, Williams and Tufts have also been in communication with DOJ officials over its antitrust investigation into early decision information-sharing. The DOJ declined to comment to the Carletonian on the investigation.

The justification for the investigation remains unclear. According to Inside Higher Ed, the DOJ’s letter asks colleges to retain communications with other colleges that disclose the identities of admitted students, as well as records of decisions made based on information received from other colleges about the identities of admitted students. Inside Higher Ed first reported news of the DOJ investigation on Friday, April 6.

According to the Wall Street Journal, an admissions dean at a New England college that also received the DOJ letter said their office shares the application ID number, name and home state of early decision admits with “about 20 other institutions.” In 2016, Amherst College’s admissions dean told U.S. News & World Report that Amherst shares lists of early decision admits with “about 30 other colleges.”

Thiboutot said that the only identifying information that Carleton shares with peer institutions is the names, home addresses, and sending schools of early decision deposited students. Last November, the Department of Justice launched an antitrust investigation into the National Association for College Admission Counseling (NACAC) ethics code, known as the Statement of Principles of Good Practice. According to Inside Higher Ed, DOJ’s letter to NACAC raised concern about a possible agreement “to restrain trade among colleges and universities in the recruitment of students.” All of the schools that received the DOJ letter are NACAC members.

In an April 9 press release acknowledging the DOJ inquiry into early decision information-sharing, NACAC said, “we have no reason to believe that this new inquiry is connected to the Justice Department’s recent requests for information about our Statement of Principles of Good Practice.”

NACAC says in its 2016 Statement of Principles of Good Practice that “institutions with Early Decision plans may restrict students from applying to other early plans. Institutions will clearly articulate their specific policies in their Early Decision agreement.”

The Common Application Early Decision Agreement, which Carleton requires early decision applicants to sign, acknowledges that “with an Early Decision offer of admission, this institution may share my name and my Early Decision Agreement with other institutions.”

“The potential for anti-competitive conduct doesn’t have to do, necessarily, with the concern that students are applying early decision twice,” said Bradley Clary ’72, Clinical Professor at the University of Minnesota Law School. “What I’m assuming what the [Antitrust] Division is interested in is whether or not  [there is] an agreement among people who are otherwise competing for the same students, to make sure that the competitors don’t ever make a better financial aid offer to an early admitted student. The Division is worried that that is in fact an anti-competitive policing practice.”

In 1989, DOJ launched an antitrust investigation into alleged price-fixing between 23 elite colleges and universities. Known as the case of the “Overlap Group,” all eight Ivy League schools and the Massachusetts Institute of Technology (MIT), as well as a group of 14 liberal arts colleges in the Northeast––several of which received the DOJ letter two weeks ago––agreed in 1991 to end their practice of meeting together to share and agree upon admitted students’ financial aid offers.

Members of the Overlap Group contended that the practice of agreeing upon financial aid allowed admitted students to choose the institution rather than the most competitive award package. In 1993, a federal judge found the Overlap Group schools guilty of having formed an illegal trust. In the same year, MIT successfully appealed the court decision, leading to the establishment of new guidelines for coordinating need-based financial aid.
Thiboutot said that Carleton does not share information about financial aid offers.

“I don’t think this is an unusual inquiry,” Clary added. “The interesting question is what triggered it, and I’m trying to figure out who would have complained. I assume none of the competing schools who are getting inquiries from the [Antitrust] Division complained. The question is, is there some student who complained?”

While Clary said he is not alarmed by the investigation, antitrust lawyer Daniel Hedlund ’89, a Partner at Gustafson Gluek PLLC in Minneapolis, is surprised. “I’ll be honest with you, I talked to some other practitioners and asked them if they can figure out what the what sort of harm here is and we’ve all sort of said, ‘we’re not sure.’”

“I’m not really sure what they’re getting at,” Hedlund continued. “It seems to me that ED could favor applicants who you know come from a privileged background because I think they’re able to apply without really being concerned about comparing financial aid offers. But that’s not necessarily anything that would catch the eye of the DOJ.”

In its January 2016 “True Merit” report, the Jack Kent Cooke Foundation found that “29 percent of high-achieving students from families making more than $250,000 a year applied early decision, compared with only 16 percent of high-achieving students from families with incomes less than $50,000.” Thiboutot and Director of Student Financial Services Rodney Oto said they were unable to sort the median and range of household income for Carleton students enrolled by each admission round––ED1, ED2 and RD––in the past year. Thiboutot said he is not sure whether Admissions regularly retains the median household income of admitted students.

A January 2017 New York Times report estimated that 14.4 percent of Carleton students born in 1991––approximately the class of 2013––came from the top one percent of the American income distribution, defined as a household income greater than $630,000 in 2015 dollars. The same report found that 15.5 percent of Carleton students came from the bottom 60 percent, defined as a household income less than $65,000, and the median parent income was $172,400. The report did not look at household income differences between early and regular decision groups.

According to the College Board, around 450 colleges have early decision or early action admissions plans. Early decision is binding––meaning that students agree to enroll and withdraw applications from other colleges if admitted––whereas early action is not.

Two weeks ago, the Carletonian reported that Admissions enrolled about 35 to 40 percent of the Class of 2022 in one of its early decision groups. This week, Thiboutot said in an interview that 42 percent of the anticipated class size of 525 were enrolled early decision.

When asked whether there are proportionally fewer students from underrepresented backgrounds admitted early decision compared to those admitted regular decision, Thiboutot answered, “I acknowledge there can be some differences. But there’s not such a radical difference to really distort the final makeup of our early decision group.”

“This year’s early decision group turned out to be almost 27 percent students of color, which runs parallel to what was our enrolled group last year in the class as a whole,” Thiboutot continued. “It had broad socioeconomic diversity across most income groups. It was even 12 percent international, so it had the same kind of representation we see in the overall enrolled group. I don’t think you’re going to find discrepancies in terms of who we’re choosing and enrolling in the early decision group.”

In this year’s application cycle, 54 percent of Fall Early Decision (ED1) enrollees applied for financial aid; 67 percent of Winter Early Decision (ED2) enrollees applied for financial aid; and Admissions projects that 53 to 55 percent of Regular Decision (RD) enrollees will have applied for financial aid.

“Increasing equity and access to leading colleges and universities is of critical importance,” said Assistant Professor of Sociology Wes Markofski. “However, I question whether equity concerns are the underlying motivation of this investigation under the current administration. Rather, recent patterns of cutting public university, school, and federal research funding while slashing corporate tax rates and looking for ways to tax nonprofit educational institutions looks like something else. It looks like yet another example of a decades-long pattern of disinvestment in public goods.”

The Trump administration’s tax plan, signed into law in December 2017, is set to levy an annual 1.4 percent excise tax on the net investment gains of schools with endowments exceeding $500,000 per student. The Carletonian cross-referenced an Inside Higher Ed list of schools set to face the endowment tax with the schools that received the DOJ letter on its early decision investigation, and found that Amherst, Bowdoin, Grinnell, Wellesley, Williams and Pomona are on both lists. GOP leaders initially proposed to tax schools with endowments exceeding $250,000 per student, which would have affected Carleton.

Clary added that DOJ “might conclude that there’s no problem here and decide not to go forward with a case that remains to be seen.” 

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