Is the Ivy League a cartel? That question motivated a recent hearing of the House Judiciary Committee, which is investigating anticompetitive practices among elite universities. The following post is adapted from the written testimony I submitted to the Committee.
The eight institutions of higher education that make up the Ivy League show many hallmarks of anticompetitive behavior. Most Ivy League institutions severely limit undergraduate admissions, turning away thousands of qualified applicants. The schools charge among the highest tuition prices in the country and are less likely to provide financial aid than other private institutions. At the same time, Ivy League universities enjoy a significant surplus that funds high levels of institutional expenditures, administrative bloat, and seven-figure salaries for some college presidents.
The Sherman Act normally forbids collusion between firms to restrict output and set prices. But some Ivy League universities recently enjoyed an exemption from antitrust laws, provided they admitted students on a need-blind basis. In 2022, a group of students filed a class-action lawsuit against 17 elite universities, including several Ivies, alleging that admissions are not actually “need-blind.” Most of these schools eventually settled the lawsuit for a collective $320 million. Another lawsuit was filed in 2024, alleging that elite institutions have continued to coordinate pricing decisions even after the antitrust exemption expired.
My testimony does not take a position on whether Ivy League universities are coordinating their pricing decisions, or whether they are in violation of federal antitrust law. But the enrollment, pricing, and spending practices of the Ivy League raise some red flags. Classic cartels limit supply in order to drive up prices and profits—and we observe a version of this happening among Ivy League schools.
Let’s start with restrictions on supply, a fundamental aspect of cartel behavior. Harvard College admitted about 2,200 students to join the Class of 1982. Due to population increases and higher rates of overall college attendance, one might expect that number to grow. Instead, Harvard admitted just over 1,900 students to join its Class of 2028. Unlike most other private colleges, Ivy League universities have mostly not increased enrollment to match rising demand. Instead, the schools have opted to become more selective, with the average Ivy League admissions rate falling from 15 percent in 2002 to just 5 percent in 2022.
As student demand rises, but Ivy League institutions keep admissions relatively flat, the obvious result is upward pressure on prices. The annual price of tuition and fees at Ivy League universities ranged between $59,000 and $69,000 in the previous academic year. That’s between 56 percent and 82 percent higher than the average for private colleges. Ivy League students are also less likely to receive financial aid. While 84 percent of students at non-Ivy private colleges enjoy a discount off the sticker price, the share of Ivy League students receiving institutional financial aid is just 52 percent.
In a traditional cartel, restricted supply and higher prices enable monopoly-like profits. While nonprofit universities don’t earn “profits” in the traditional sense, they still enjoy surplus revenues. Ivy League universities spend an average of $126,000 per full-time equivalent student, compared to just $35,000 for the average private college. These high levels of spending fuel a vast administrative bureaucracy. The average Ivy League institution employs one noninstructional staffer for every two students, compared to one staffer for every six students at other private colleges.
This behavior matters because Ivy League institutions have an outsize impact on the future of America. Ivy League graduates are vastly overrepresented among elites in business, politics, and media. A group of institutions which limits enrollment and charges excessive prices denies opportunity to thousands of students, particularly middle-class students with strong academic qualifications, who face an unfairly low likelihood of admission today. The surplus revenues that Ivy League institutions enjoy currently fuel administrative bloat, but they could be used instead to create more seats for qualified applicants.
The market for Ivy League education bears many of the telltale signs of anticompetitive behavior. Whether it meets the legal definition of a cartel is an open question, but it unambiguously leaves students and society worse off.
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