For nearly a quarter century, a group of the nation’s most elite universities had a legal shield: They would be exempt from federal antitrust laws when they handed out formulas to measure the financial need of prospective students.
But the provision included a critical requirement: that the partner universities’ admissions processes be “need-blind,” meaning they could not factor in whether a prospective student was wealthy enough to pay.
A court filing Tuesday night revealed that five of those universities — Brown, Columbia, Duke, Emory and Yale — collectively agreed to pay $104.5 million to settle a lawsuit that accused them of, in effect, weighing their financial ability when they discussed fate. certain applicants.
Although the universities have not admitted wrongdoing and resisted accusations that their approach had harmed students, the settlements nonetheless question whether the schools, which have spent years touting the generosity of their financial aid, did what they could to lower tuition.
In separate statements after the court filing, Columbia and Brown denied wrongdoing and maintained that all financial aid decisions were made in the best interest of students and their families. Resolving the case, Brown said, will allow her to “focus her resources on further developing generous student aid.”
The agreements by the five universities came months after the University of Chicago agreed to pay $13.5 million to settle its portion of the case. Other schools, including Cornell, Georgetown, Johns Hopkins, MIT and the University of Pennsylvania, remain mired in the lawsuit, with no trial date set.
The sprawling lawsuit targeted 17 schools that are, or were, members of the 568 Presidents Group, named for the legal provision that offered antitrust coverage. The case argued that the universities did not actually comply with the need-blind admissions mandate when they discussed wait-listed applicants, making the financial aid protocols illegal.
Vanderbilt University, for example, said on one of its websites in 2018 that it reserves “the right to be aware of need when admitting students on a waiting list,” echoing earlier statements by university officials.
Vanderbilt, based in Nashville, told the court last year that it planned to settle.
By considering the need in either context, the suit argued, the universities were flouting the terms of their antitrust exemption. Complicating the course for universities, the case drew attention to a legal doctrine that holds that members of a group are responsible for the actions of others in the same group.
Ultimately, the suit claimed, some 200,000 students over roughly two decades were overcharged because the 568 Group had eliminated cost competition, leaving the net price of attendance “artificially inflated.”
If universities had competed more aggressively for financial aid, the lawsuit said, students could have received more aid and spent less to attend college.
The antitrust shield expired in 2022 and Group 568 was dissolved.
Although the University of Chicago said the lawsuit was “without merit” when it settled the case, it agreed to share records that could be valuable in litigation against the other universities.
A handful of other universities have since made similar calculations, admitting no wrongdoing, while limiting both their financial exposure and the risk of damaging disclosures appearing in records or depositions.
“While we believe the plaintiffs’ allegations are without merit, we have reached a settlement in the interest of our continued focus on providing talented scholars from all social, cultural and economic backgrounds with one of the best undergraduate studies in the world and the opportunity to graduate debt-free.” , Vanderbilt, which is still finalizing its settlement, said in a statement.
For plaintiffs, the planned settlements offer an advantage beyond the wave of money shared between students and lawyers: By reducing the ranks of defendants, they also streamline a case that could prove extremely complicated at trial.
Emory and Yale are expected to pay $18.5 million, and Brown is settling for $19.5 million. Columbia and Duke agreed to pay $24 million each. Separate from Tuesday’s filing, Rice University said in a recent financial statement that it agreed to pay nearly $34 million.
In their filing Tuesday, attorneys for the plaintiffs said the settlements “were not reached as a group or simultaneously, but instead were pursued separately over time.” The lawyers added that they “followed a strategy of increasing settlement amounts with each successive agreement or set of agreements to pressure non-settling defendants to settle immediately or risk paying much more by waiting.”
Financial aid practices at elite universities have long been subject to antitrust scrutiny. In the late 1980s, the Justice Department opened a price-fixing investigation that led to a series of settlements in the 1990s as Ivy League schools sought to avoid potentially titanic legal battles. (MIT rejected the settlement at first and opted for a trial. It later reached an agreement with the government as well, with the language of the settlement becoming something of a template for Section 568.)
In a filing last year, the Justice Department signaled its support for some of the legal arguments supporting this current political case that schools are being settled.
Stephanie Saul contributed to the report.
