$284 Million College Financial Aid Antitrust Settlement Approved

A $284 million settlement has been approved in a class action lawsuit against 10 elite colleges accused of conspiring to reduce financial aid and inflate tuition costs for students in need of aid.

Students Affected: Approximately 200,000 current and former students who attended the 10 settling colleges between 2000 and 2021.

Reason for Lawsuit: Allegations that the colleges formed a "price-fixing cartel" to limit financial aid, violating antitrust laws and harming students from lower-income families.

Court: The class action lawsuit was filed and settled in the U.S. District Court for the Northern District of Illinois.

Students who accused 17 colleges of creating a “cartel” that controlled financial aid amounts and made it more expensive for those needing financial aid to attend college will get $284 million, with a judge recently approving the settlement amount. 

U.S. District Judge Matthew Kennelly approved the settlement, in which Brown, Yale and Columbia universities agreed to pay a combined $62 million; Dartmouth and Rice agreed to pay $33.75 million each; Northwestern agreed to pay $43.5 million; and Vanderbilt agreed to pay $55 million, Reuters reports. Students can expect around $2,000 each from the settlement. 

Of the 17 schools accused of favoring wealthy students in college admissions in the class action lawsuit, 10 have settled to date but all deny any wrongdoing.  

"We are pleased that the settlements were approved and we are eager to get money out to class members," attorney for the plaintiffs Eric Cramer, chairman of Berger Montague, told Reuters.

Colleges Accused of Forming "Price-Fixing Cartel" to Limit Financial Aid

The students first filed the class action lawsuit against the 17 schools, part of the “568 Presidents Group,” in 2022 on behalf of approximately 200,000 current and former college students. 

They alleged that the colleges, which had developed a “Consensus Methodology” for determining a students ability to pay for college and met annually to discuss financial aid calculations, had created a “price-fixing cartel” with their agreement that resulted in reducing the institutional dollars going towards financial aid and making it more expensive for lower income students to attend college. The group dissolved when the lawsuit was filed. 

The lawsuit said the colleges “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.” 

The students alleged the actions violated Section 568 of the Improving America’s Schools Act of 1994.

Plaintiffs Pursue Settlements with Remaining Universities

While the settlement is bound to be a relief for the students who have been involved in the litigation for two years, they are still involved in legal action with Cornell, Georgetown, and University of Pennsylvania who have yet to reach a settlement. 

Lawyers for the students told Reuters they are attempting a strategy of “increasing the settlement amounts with each successive agreement to exert pressure on non-settling defendants."

Higher Education Institutions Face Growing Scrutiny Over Student Rights

Higher education institutions have been accused of violating students’ rights before, and faced legal action over it. Walden University recently paid $28.5 million to female and Black students, after the students filed a class action lawsuit accusing the for-profit college of falsely advertising about how long it would take to complete a degree. The lawsuit accused the school of generating billions in extra tuition dollars because of the alleged scam.

Meanwhile, the Supreme Court recently declined to stop a class action lawsuit settlement, whereby student loan borrowers accused more than 150 schools of defrauding them resulting in a $6 billion loan forgiveness settlement. The settlement will now go ahead.

Case Details

• Lawsuit: Henry, et al. v. Brown University, et al.
• Case Number: 1:22-cv-00125
• Court: U.S. District Court  for the Northern District of Illinois