Yale, Duke and Columbia are among the elite schools to settle a price-fixing case
For nearly a quarter century, a group of the nation’s most elite universities had a legal shield: They were exempt from federal antimonopoly laws if they shared formulas for measuring the financial need of prospective students.
But the provision included a crucial requirement: that the collaborating universities’ admissions procedures would be “need-blind,” meaning they could not take into account whether a prospective student was wealthy enough to pay.
A court document released Tuesday evening revealed that five of those universities — Brown, Columbia, Duke, Emory and Yale — have jointly agreed to pay $104.5 million to settle a lawsuit accusing them of in fact, have taken their financial capacity into account in their deliberations about the fate of some applicants.
While the universities admitted no wrongdoing and pushed back against accusations that their practices harmed students, the settlements raise questions about whether the schools, which for years touted the generosity of their financial aid, did all they could to lower tuition.
In separate statements after the lawsuit, Columbia and Brown denied wrongdoing and maintained that all financial aid decisions were made in the best interests of students and their families. By resolving the matter, Brown said, the company can “focus its resources on continuing to grow generous aid for students.”
The five universities’ agreements 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 locked in the lawsuit, with no trial date set.
The vast court case targeted 17 schools that were or were members of the 568 Presidents Group, named for the legal provision that provided antitrust coverage. The case argued that universities did not actually adhere to the need-blind admissions mandate when deliberating on waitlisted applicants, making their financial aid protocols illegal.
For example, Vanderbilt University said on one of its websites in 2018 that it “reserves the right to be aware of needs when admitting waitlisted students,” echoing previous statements by university officials.
Nashville-based Vanderbilt told the court last year that it planned to settle.
By considering necessity in any context, the lawsuit argued, the universities defied the terms of their antitrust exemption. The case complicated the universities’ path and drew on a legal doctrine that holds that members of a group are responsible for the actions of others in the same group.
Ultimately, the lawsuit said, about 200,000 students paid too much over about two decades because the 568 Group eliminated competition on costs, “artificially inflating” the net price of attendance.
If universities had competed more aggressively for financial aid, students could have received more aid and spent less on their education, the complaint says.
The antitrust shield expired in 2022 and the 568 Group was dissolved.
Although the University of Chicago said the lawsuit was “without merit” when it settled the case, it agreed to share data that could be valuable in the lawsuit against the other universities.
A handful of other universities have since made similar calculations, admitting no wrongdoing while limiting their financial exposure and the risk of damaging disclosures in documents or testimony.
“While we believe the plaintiffs’ claims are without merit, we have reached a settlement in the best interest of our continued focus on providing talented scholars from all social, cultural, and economic backgrounds with one of the world’s best undergraduate educations and the opportunity to graduate debt-free,” Vanderbilt, which is still working to finalize the settlement, said in a statement.
For plaintiffs, the planned settlements offer an advantage beyond the enormous amount of money to be distributed among students and lawyers: By shrinking the ranks of defendants, they also streamline a case that could prove exceptionally complex at trial.
Emory and Yale are both expected to pay $18.5 million, with Brown settling for $19.5 million. Columbia and Duke have agreed to pay $24 million each. Separately from Tuesday’s filing, Rice University said in a recent financial statement that it had agreed to pay nearly $34 million.
In their filing Tuesday, the plaintiffs’ attorneys said the settlements “were not reached as a group or all at once, but were instead pursued individually over time.” The attorneys added that they had “engaged in a strategy of increasing the settlement amounts with each successive agreement or series of agreements in order to put pressure on non-settling defendants to reach agreements in short order or risk having to pay significantly more by waiting.”
The financial aid practices of elite universities have long been under antitrust scrutiny. In the late 1980s, the Justice Department opened a price-fixing investigation, leading to a series of settlements in the 1990s as Ivy League schools sought to dodge potentially monumental legal battles. (MIT initially refused to settle, opting instead to go to trial. It later reached an agreement with the government, with the settlement language becoming a kind of template for Section 568.)
In a document last year, the Justice Department indicated that it supports a number of legal arguments underlying the current civil case the schools are settling.
Stephanie Saul contributed to the reporting.
