The University of Chicago agreed this week to pay $13.5 million to resolve claims it conspired with 16 other elite schools — including most members of the Ivy League — to limit financial aid for admitted students.
It is the first defendant in the lawsuit, which was filed in Illinois federal court in January 2022, to settle. Attorneys for eight former students who brought the class-action lawsuit declined to discuss whether other agreements are in the works but said the deal with the University of Chicago is a critical step forward.
“This settlement … underscores once again the strength of the plaintiffs’ case and further shines the spotlight on the defendants who have not yet stepped up to do the right thing for their students and alumni,” said Robert D. Gilbert, managing partner at Gilbert Litigators and Counselors, which is representing the former students along with the firms Freedman Normand Friedland and Berger Montague.
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A judge must approve the settlement.
As part of the tentative deal, the University of Chicago has agreed to provide information, including documents and a witness interview, that attorneys for the plaintiffs say will assist in their cases against the remaining schools.
The lawsuit alleges that 17 colleges and universities use a shared methodology to calculate financial need in a way that reduces institutional dollars to students from working- and middle-class families. Attorneys estimate that approximately 200,000 students have been harmed by the practice in the past 20 years.
The settlement would provide cash payments to the entire class, not just those who attended the University of Chicago.
Other schools named in the suit are Georgetown University, Columbia University and the California Institute of Technology, Northwestern University, Brown University, Cornell University, Yale University, Dartmouth College, the University of Pennsylvania, Duke University, Emory University, Vanderbilt University, the Massachusetts Institute of Technology, the University of Notre Dame, Johns Hopkins University and Rice University.
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All of the schools have denied the allegations in court and tried unsuccessfully to have the case dismissed. The Justice Department intervened in support of the former students last year and asked the judge to allow the case to continue.
Share this articleShareAt a hearing in July, U.S. District Judge Matthew Kennelly revealed that the Justice Department and the New York attorney general’s office are investigating “the very same issues” raised in the lawsuit, but did not expound on the parameters of the probe, according to court transcripts.
The Justice Department declined to comment on the matter.
In a court filing this week, the University of Chicago said the settlement is not an admission of guilt, but rather a way to avoid the expense of continued litigation. University spokesman Gerald McSwiggan said the claims are without merit.
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“The University of Chicago is committed to removing financial barriers for undergraduate students who are admitted to the College and is proud of the extensive financial aid we offer to students,” McSwiggan said in a statement Wednesday. “We look forward to putting this matter behind us and continuing to focus our efforts on expanding access to a transformative undergraduate education.”
The lawsuit is rooted in a 1994 federal antitrust exemption that let colleges collaborate on financial aid guidelines if they engage in “need-blind” admissions, accepting students without regard for their financial circumstances. Need-blind policies are meant to create economic and racial diversity at prestigious schools that have long been bastions of wealth and privilege.
But the suit alleges the universities in question do consider students’ ability to pay and favor the wealthy by maintaining admissions policies that give a leg up to the children of past or potential donors — which the plaintiffs say violate the antitrust exemption that expired in the fall.
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The schools were all part of the 568 Presidents Group, an organization of highly selective institutions that collaborated on aid formulas through what they call a consensus approach. The group, formed in 1998 and dissolved last year, worked together to maintain a financial-aid system that brought “greater clarity, simplicity, and equity to the process of assessing each family’s ability to pay for college,” according to the group’s website.
But the lawsuit claims the methodology the group used significantly weighs an applicant’s ability to pay in determining the net price — what students pay after taking grants, scholarships and tax credits into account. And members who adopted the approach have artificially inflated the net price of attendance for financial aid recipients for years, the complaint argues. The University of Chicago left the group in 2014.
Susan Svrluga contributed to this report.
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