The University of Chicago was the first of 16 major universities to settle allegations that it participated in a plan to keep financial assistance packages low.
Five former undergraduate students from Duke, Northwestern, and Vanderbilt filed a lawsuit in January 2022. Against a field of 16 colleges that included UChicago, Brown, Yale, and Northwestern. The claim was filed against the 568 Presidents Group. This enabled schools to collaborate to develop standardised standards for disbursing financial aid.
Elite Colleges Settle Lawsuit Alleging Price-Fixing Cartel Impacting Financial Aid: Insights and Implications
The lawsuit accused the institutions of “participating in a price-fixing cartel designed to reduce or eliminate financial aid as a locus of competition.” According to the initial lawsuit petition, “this has artificially inflated the net price of attendance for students receiving financial aid.” According to the plaintiffs, the colleges favoured wealthier students and “conspired” to cut financial aid offers. In addition, they “overcharged at least 170,000 financial-aid recipients by hundreds of millions of dollars.”
The action was filed in response to an antitrust exemption under Section 568 of the Higher Education Act. This permitted institutions to work on financial aid formulas provided they are “need blind,” which means they do not evaluate a student’s capacity to pay when admitting students. And discovered strategies to account for the wealth that a prospective student would bring to the school.
University of Chicago Agrees to $13.5 Million Settlement Pending Court Approval
UChicago agreed to a $13.5 million settlement last week, which is still pending approval by the US District Court for the Northern District of Illinois. The school agreed to give financial incentives to students enrolled in full-time undergraduate programmes at one of the designated schools. Received financial aid from one of the colleges and paid directly for tuition, fees, lodging, or board that was not fully covered by financial aid in one of the following categories. The settlement class period is as follows:
- From 2003 through the settlement date, attended UChicago, Columbia, Cornell, Duke, Georgetown, MIT, Northwestern, Notre Dame, Penn, Rice, Vanderbilt, and Yale.
- From 2004 to the settlement date, attended Brown, Dartmouth, or Emory.
- From 2019 till the settlement date, I attended Caltech.
- From 2021 until the settlement date, I attended Johns Hopkins University.
The deal is currently awaiting preliminary and final court approval. The named schools denied any misconduct.
