Chicago, Illinois – Four prestigious universities have reached a settlement in a federal class-action lawsuit accusing them of colluding to manipulate the amount of financial aid offered to students. Dartmouth College, Rice University, Northwestern University, and Vanderbilt Universities will collectively pay $166 million to resolve the claims against them, according to a court filing on Friday.
As part of the settlement, Dartmouth and Rice will each pay $33.75 million, while Vanderbilt will pay $55 million and Northwestern has offered $43.5 million. This brings the total settlement reached so far to $284 million, which will be distributed among the affected undergraduate students, with an estimated amount of $750 per student. The settlement remains subject to approval by a judge.
So far, ten out of the 17 defendant schools have agreed to settle the case, even though they continue to deny the allegations. The seven remaining universities in the lawsuit are 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.
The antitrust lawsuit, filed in 2022 in an Illinois federal court, was brought by several law firms on behalf of students who attended some of these universities. The plaintiffs allege that the defendant universities engaged in a price-fixing scheme by sharing a methodology for determining financial aid awards, artificially inflating the net price of attendance for students receiving financial aid.
The lawsuit claims that this practice is a violation of Section 568 of the Improving America’s Schools Act of 1994, which allows universities to collaborate on financial aid formulas as long as they do not consider applicants’ financial need in individual admission decisions.
The lawsuit targets the 17 members of the “568 Presidents Group,” which developed a “Consensus Methodology” for evaluating a family’s ability to pay for college. The group allegedly met regularly to discuss financial aid calculations.
Ted Normand, a lawyer for the plaintiffs, stated that the new settlements would significantly increase compensation to the affected students for the harm caused by the alleged cartel.
The court filing did not mention any admission of guilt by the universities involved, but rather the settlements were reached to resolve the claims against them.