Elite US universities settle price-fixing class action

Five leading US universities have agreed to pay $104.5 million (£82 million) to settle a legal claim that accused them of violating “needs-blind admissions” rules designed to prevent institutions from considering whether an applicant is wealthy enough to pay.

In a court deposition made on 23 January, it was revealed that Brown, Columbia, Duke, Emory and Yale universities have undertaken to pay a multimillion-dollar sum to settle the lawsuit which claimed that top colleges had illegally colluded to hold down financial aid payments.

None of the universities accepted wrongdoing and have maintained financial aid decisions have been made in the best interests of students.

The settlement follows the decision by the University of Chicago – one of 17 elite universities accused of breaking anti-trust laws – to pay $13.5 million to settle its portion of the class action in August, although it claimed the case against it was “without merit”.

Other institutions in the so-called 568 Group, which had previously claimed an exemption from anti-trust laws which allowed them to jointly set their financial aid formulas, remain locked in the legal action. These include Cornell, Georgetown and Johns Hopkins universities, the Massachusetts Institute of Technology and the University of Pennsylvania.

The settlement comes after the Justice Department told a court hearing in July 2022 that the 568 exemption should be permitted only if every participating institution took a fully need-blind approach to its entire admissions processes. However, the plaintiffs claimed it had evidence that a number of universities clearly did not do this, suggesting the court should rule in favour of student plaintiffs.

Lawyers against the universities have claimed the practice cost an estimated 200,000 former students between $10,000 and $20,000 apiece in aid, meaning the potential bill for universities could run into billions of dollars.

According to one attorney, Robert Gilbert, who brought the case with other lawyers, the 568 universities had “exploited the exemption to favour wealthy applicants and families [for decades], and to disfavour applicants from middle-class and working-class families”.

According to The New York Times, Emory and Yale are both expected to pay $18.5 million, and Brown is settling for $19.5 million. Columbia and Duke have agreed to pay $24 million each. Rice University has also said in a recent financial statement that it had agreed to pay almost $34 million.

jack.grove@timeshighereducation.com