Four Prestigious Universities Settle Lawsuit Alleging Price-Fixing of Financial Aid
Dartmouth, Rice, Northwestern, and Vanderbilt agree to pay $166 million
Four more prestigious universities have agreed to settle a two-year-old federal class-action lawsuit accusing them of colluding to fix the amount of financial aid they offered to students.
Dartmouth College, Rice University, Northwestern University, and Vanderbilt Universities will collectively pay $166 million to resolve the claims made against them in the lawsuit that involved a total of 17 defendant schools, according to a court filing.
Compensation and Settlement
Dartmouth and Rice have each agreed to pay $33.75 million, while Vanderbilt will pay $55 million, and Northwestern has offered $43.5 million to resolve the charges.
The total settlement in the case has reached $284 million, as ten of the defendant schools have agreed to settle, although they continue to deny the allegations.
Cash payments from the settlement will be made to the class of affected undergraduate students, with each student estimated to receive approximately $750, pending approval by a judge.
Remaining Defendants
Seven universities, including the California Institute of Technology, Cornell University, Georgetown University, Johns Hopkins University, the Massachusetts Institute of Technology, the University of Notre Dame, and the University of Pennsylvania, are still involved in the lawsuit.
Background of the Lawsuit
The antitrust lawsuit, filed in 2022 in an Illinois federal court, was brought by a group of students who previously attended some of the universities.
The plaintiffs alleged that the universities engaged in a price-fixing scheme by sharing a methodology for determining the financial aid awarded to prospective students. The suit claimed the universities “participated in a price-fixing cartel that is designed to reduce or eliminate financial aid as a locus of competition, and that in fact has artificially inflated the net price of attendance for students receiving financial aid.”
If proven true, this violation of Section 568 of the Improving America’s Schools Act of 1994 would raise concerns regarding universities collaborating on financial aid decisions without considering applicants’ financial need in individual admission decisions.
The lawsuit targeted the 17 members of the “568 Presidents Group,” who developed a “Consensus Methodology” for determining a family’s ability to pay for college. The group allegedly met annually to discuss financial aid calculations.
Ted Normand, a lawyer representing the plaintiffs, commented, “These new settlements will significantly increase the compensation to the class members for the harm we allege the defendants’ cartel caused.”
